ANTOFAGASTA PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022 ## Developing mining ## for a better future Annual Report and Financial Statements 2022 ## Contents | Strategic Report | Corporate Governance | | Financial Statements | | --- | --- | --- | --- | | Overview | Applying the Code in 2022 104 | | Financial performance | | Our purpose 1 | Board leadership and | | Independent auditors’ report 174 | | | Company purpose | 106 | | | Performance highlights 2 | | | Consolidated income statement 181 | Division of responsibilities 118 At a glance 4 Consolidated statement Composition, succession of comprehensive income 182 Letter from the Chairman 6 and evaluation 125 Letter from the Chief Executive Officer 9 Consolidated statement of changes Audit, risk and internal control 129 in equity 182 The copper market 12 Consolidated balance sheet 183 Business model 16 Remuneration Consolidated cash flow statement 184 Our strategic framework 18 Remuneration and Talent Management Notes to the financial statements 185 Key Performance Indicators 22 Committee Chair’s introduction 142 Parent Company financial statements 234 Risk management 24 Remuneration at a glance 146 2023 Directors’ and CEO’s Stakeholder review Remuneration Policy 148 Other Information Highlights 40 2022 Directors’ and CEO’s Alternative performance measures 238 Our approach to sustainability 42 Remuneration Report 155 Five-year summary 242 How we engage with our stakeholders 46 Remuneration and Talent Management Production statistics 244 Our people 48 Committee report 163 Ore reserves and mineral resources Safety and occupational health 51 Implementation of the Directors’ and estimates 245 CEO’s remuneration policy in 2023 165 Communities 54 Glossary and definitions 256 Directors’ Report 168 Environment 57 Shareholder information 259 Statement of Directors’ Climate change 60 responsibilities 171 Task Force on Climate-related Financial Disclosures (TCFD) 64 Suppliers 67 Customers 70 Shareholders 71 Governments and regulators 72 Non-financial information statement 73 Our reporting suite Operating review Mining division 76 Sustainability Report Social Management Report Transport division 84 antofagasta.co.uk/sr22 antofagasta.co.uk/smr22 Growth projects and opportunities 86 Tax Progress Report ESG Data Book Exploration activities 89 antofagasta.co.uk/tax21 antofagasta.co.uk/esgdb Key costs 90 Operating excellence and innovation 92 Climate Change Report antofagasta.co.uk/ccr22 Financial Review 94 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. ## We are committed ## to our purpose of ## developing mining ## for a better future Read more on how we are delivering on our strategic framework on P18 1Antofagasta plc Annual Report 2022 Strategic Report / Performance highlights ## Key performance ## highlights in 2022 ### Record year for safety, and strong growth in ### mineral resources. Production in transition while ### Los Pelambres advances its expansion projects. ### NON-FINANCIAL HIGHLIGHTS 2 3 Safety Copper production Mineral resources ## 0 0.84 646,200 20.1bn 1 Fatalities LTIFR Record safety performance, with no fatal ## tonnes tonnes accidents, and all our safety indicators Copper production decreased by 10% mainly Total mineral resources increased by 1 billion improved during the year. due to the temporary reduction in throughput tonnes during the year. at Los Pelambres as a result of the drought and the reduced concentrate pipeline availability in June, and expected lower grades at Centinela Concentrates. Water withdrawals Scope 1 and 2 emissions Growth projects Zaldívar Chloride Leach project | 73 GL | 1.3 million | | | | --- | --- | --- | --- | | of which 45.4% was sea water. | | | 100% | | | tCO | e | completed in 2022. | ## 2 Decreased by 37% since 2021. Esperanza Sur Pit project Gender diversity Total economic contribution ## 100% pre-stripping completed in July 2022. Los Pelambres Expansion project ## 20.4% $7.4bn of our employees are women. We generate economic value for all our stakeholders, 4% higher than last year. ## 93% More information on P41 complete as at the end of 2022 with the desalination plant and the concentrator plant expansion due to be in production during the second quarter of 2023. Centinela Second Concentrator project Engineering and pre-investment studies underway. Antofagasta plc Annual Report 20222 ### FINANCIAL HIGHLIGHTS 4 4 Net cash costs EBITDA Profit before tax | $1.61/lb | $2,930m | $2,559m | | --- | --- | --- | | Increased by 34% since 2021 mainly due | Decreased by 39% with an EBITDA margin | Profit before tax decreased by 26%. | | to the impact of the drought and higher input | of 50%, reflecting a decrease in copper sales, | | | prices, partly offset by the weaker Chilean | a lower copper price, higher inflation and | | | peso and savings coming from our Cost and | higher input prices. | | Competitiveness Programme. Underlying earnings per share Earnings per share including Total dividend 4 excluding exceptional items exceptional items per share | $59.7¢ | $155.5¢ | $59.7¢ | | --- | --- | --- | | Underlying earnings per share decreased | Earnings per share including exceptional | Equivalent to a payout ratio of 100%. | | by 82.8 cents or 58% compared with 2021 | items for the year, reflect the impact of an | | | on lower EBITDA. | exceptional gain of 95.8 cents per share, | | and were 18% higher than in 2021. 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 238. Antofagasta plc Annual Report 2022 3 Strategic Report / At a glance ## A portfolio that delivers ### 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. 2 Employees 1 Copper production Net cash costs Gender diversity ## LOS PELAMBRES 275,000 tonnes $1.10/lb 1,144 60% owned 2022 2022 ## 22.2% women 12-year mine life ## 320-335,000 tonnes $1.25/lb Produces copper concentrates containing 2023 forecast 2023 forecast gold and silver and a separate molybdenum concentrate ## CENTINELA 247,500 tonnes $1.75/lb 2,484 70% owned 2022 2022 ## 20.9% women 43-year mine life ## 235-250,000 tonnes $1.70/lb Produces copper cathodes and copper 2023 forecast 2023 forecast concentrates containing gold and silver and a separate molybdenum concentrate ## ANTUCOYA 79,200 tonnes $2.50/lb 894 70% owned 2022 2022 ## 15.2% women 21-year mine life ## 70-75,000 tonnes $2.45/lb Produces copper cathodes 2023 forecast 2023 forecast ## ZALDÍVAR 44,500 tonnes $2.39/lb 932 50% owned (and operated) 2022 2022 ## 12.8% women 13-year mine life ## 45-50,000 tonnes $2.70/lb Produces copper cathodes 2023 forecast 2023 forecast | TRANSPORT | 7.1m tonnes | 1,410 | | --- | --- | --- | | Cargo transport system in the Antofagasta | 2022 | | | Region of Chile | | 19.9% women | 900 km rail network 3 ## GROUP 646,200 tonnes $1.61/lb 7,494 2022 2022 3 | | | 20.4% | women | | --- | --- | --- | --- | | 670-710,000 tonnes | $1.65/lb | | | | 2023 forecast | 2023 forecast | | | 1. Non-IFRS measure, refer to the alternative performance measures section on page 238. 2. Employees, excludes contractors as at 31 December 2022. 3. Group includes 630 employees in our corporate offices, 35.2% of them are women. Antofagasta plc Annual Report 20224 Antucoya Centinela Zaldívar ### ESG COMMITMENT Sustainability is at the heart of our decision-making as we seek to achieve our purpose of developing mining for a better future. Each of our four mining operations has been awarded the Copper Mark, the copper industry’s new responsible production assurance framework, and completed the ICMM’s Performance Expectations Los Pelambres third-party validation process. Santiago 4 Revenue EBITDA ## $5,862m $2,930m | Los Pelambres | $2,559m | Los Pelambres | $1,473m | | --- | --- | --- | --- | | Centinela | $2,406m | Centinela | $1,157m | | Antucoya | $704m | Antucoya | $261m | | | | Zaldivar | $147m | | | | Transport | $80m | ### FUTURE GROWTH | The Group has a pipeline of growth projects | sent to the Board for final investment approval | | --- | --- | | to develop our significant mineral resource | during 2023 following completion of the Los | | base which we are currently advancing through | Pelambres Expansion project and once there is | | a disciplined process of project evaluation. | sufficient clarity on the outcomes of the ongoing | | We also have a portfolio of growth opportunities | discussions on the mining royalty and tax reform | | located mainly in Chile. | bills, and the rewriting of the Chilean constitution. | The Zaldívar Chloride Leach project was completed in 2022 and pre-stripping of the Esperanza Sur pit project was completed in July. The Los Pelambres Expansion project was 93% complete as at the end of 2022 with the desalination plant and the concentrator plant expansion due to be in production during the second quarter of this year. Progress continues on the engineering and pre-investment studies for the $3.7 billion Centinela Second Concentrator project. In line with our strict approach to capital allocation, the project will be 4. Totals to more than 100% as excludes $187 million of corporate costs, exploration and evaluation, and other non-operating income and expenses. See Note 6 to the financial statements. Antofagasta plc Annual Report 2022 5 Transport $193m Strategic Report / Letter from the Chairman ## At our core, we are ## a long-term business A powerful long-term tailwind for copper also continued to gather strength: the transition to a low-carbon economy. The United States passed the Inflation Reduction Act in 2022 and the European Union recently announced its Net Zero Industry Act. Together they promise to spur further investment in the many copper-intensive products and technologies integral to a net-zero world. And in November 2022, COP27 took place in Egypt, drawing further attention and commitments from governments to a net-zero future. Chile’s economic, social and political environment The centrality of climate change to Chile – and to Antofagasta th Heat waves, wildfires, a drought stretching into its 13 year; the effects of climate change were once again powerfully felt in Chile. It’s a vital issue for the country, for business, for the communities where we operate, and for our people and their families. It is important that I highlight what we’re doing to align ourselves with Chile’s vision for Jean-Paul Luksic a net-zero future. Chairman Achieving and setting new climate-related targets Combatting climate change sits at the centre of Antofagasta’s strategy. Lowering emissions and reducing continental water use remain two key issues for which we have a group-level strategy, board-level focus and Dear shareholders company-wide initiatives. At its core, Antofagasta is a long-term business. Our mines operate on decades-long timelines and our strong balance sheet is the result of In line with Chile’s national target, Antofagasta is working towards being years of disciplined capital allocation. We continue to be mindful of carbon-neutral by 2050. Last year we surpassed our 2025 emission short-term developments but remain committed to thinking and acting target to reduce our emissions by 30%, achieving this three years early, for the long-term. and we are now in process of setting a new target. This year has certainly had its challenges, but it is times such as these In April 2022, the last of our mining operations started using solely that make demands on us that calmer times do not. They test our renewable energy and all our mining operations have now received The resolve and resilience, and in this Annual Report you’ll find stories about Copper Mark, an independently verified responsible production standard. what we have done to demonstrate both. My thanks go out to everyone Our project to build a desalination plant and water pipeline at Los across our company who helped us to navigate the year successfully. Pelambres will start operating in the second quarter of 2023 and by I also want to take this opportunity to acknowledge everyone’s efforts 2025 we expect that 90% of the Group’s water usage will be sea or that have led to us having a record safety performance this year. Not recirculated water, substantially reducing our continental water only did we not have any fatal accidents, but we also improved our high withdrawals. potential incidents and lost time injury frequency rate to record lows. Our commitment to Environmental, Social and Governance (ESG) I know this requires constant care and attention from everyone at our Our efforts on climate change are an integral part of our ESG strategy, operations, from the leadership team to every employee and contractor but far from the only ones. The copper we produce has a key role to and I applaud them for their success. play in a net-zero world; our responsibility is to produce it sustainably, 2022 – A volatile year for copper and the global economy efficiently, and with respect for local communities and the environment. Copper’s price fluctuations reflected the broader volatility in the global ESG considerations are integrated into our business and we are working economy. Although the details differed in important ways for each major with our suppliers, not just in the application of our safety standards, economy, their growth was similarly dampened in 2022. Driving the but also of our sustainability practices. In 2022, Antofagasta set new slowdown were headwinds that dominated the headlines for much standards for sustainability for our suppliers, and by doing so we plan to of the year: Russia’s invasion of Ukraine and the economic shockwaves gradually align their ESG capabilities with our own. Whether it’s lowering and energy crisis it sparked; rising inflation and interest rates; the emissions, insisting on enhanced minimum wages, or ensuring that lingering effects of COVID-19; China’s reduced economic activity; mining becomes more diverse and inclusive, such partnerships are and ongoing supply shortages and strained global supply chains. poised to deliver progress in areas that are fundamental to our purpose: Yet it wasn’t entirely a year of headwinds for copper. As China, a market “Developing Mining for a Better Future”. that consumes over half of the world’s metals, relaxed its zero-COVID policies in the final weeks of 2022, and as the country’s property market started to show signs of recovery, commodity prices lifted due to low stocks and an anticipation of a return to stronger economic growth. In March, copper reached a historic high of $4.86/lb before falling to a low of $3.18/lb in July and then recovering to end the year at $3.81/lb. Antofagasta plc Annual Report 20226 A notable operational issue that Antofagasta faced this year related to ## “ESG considerations water. The drought in central Chile continued to affect communities in the region and Los Pelambres. The water shortage has reduced our ## are integrated into production in the short-term, but we will soon complete construction of a new desalination plant and this will lift the water constraints at Los Pelambres. ## our business.” Challenges such as this reinforce the importance of planned investment, our engagement with local communities and decisions we’ve taken over the years to become a more resilient business. The desalination plant would have been completed earlier but for the pandemic, and we need Chile’s handling of COVID-19 to expand this plant to improve the water availability for other consumers COVID-19’s effects waned during the year, but Chile was not immune in the region. The expansion is currently being permitted and if this is to the economic challenges felt by many countries, particularly rising completed on schedule over 95% of Los Pelambres’s water will then be inflation and supply chain disruptions. The country’s budget deficit during either sea or recirculated water. the pandemic period was over 7% of GDP, but in 2022 the deficit is Los Pelambres also advanced its concentrator plant expansion during the expected to have reversed to a surplus of approximately 1.6% of GDP, year and this will come into production in the second quarter of 2023. a commendable achievement. Exit from Reko Diq, Pakistan Chile’s uncertain political environment Ten years after work on the Reko Diq project stopped, Antofagasta In a September referendum, the country rejected a proposed draft for finalised an agreement with Barrick Gold Corporation and the a new Constitution, reflecting support for a more centrist approach going Governments of Pakistan and Balochistan to exit the project and receive forward. A new Constitution will be drafted in 2023, with a new proceeds of $946 million. This enables us to refocus our time and referendum scheduled for December. My hope is that this new resources on strengthening Antofagasta’s business in other priority Constitution will unite Chileans and provide the clarity and stability that locations, notably in the Americas. helps attract investments and all the opportunities that flow from them Twin Metals Minnesota, USA to Chile. In January 2022, the US Department of Interior cancelled two mineral After a long period of discussion between Congress, government and leases which Twin Metals had renewed in 2019. The Company is industry, the proposed mining royalty bill is now with the Senate for challenging this decision and we still believe that Twin Metals represents review before moving to the lower house. Our focus remains on a world-class project to provide the critical metals that a growing and ensuring that Chile’s mining industry, which accounts for more than 10% greener world requires. of the country’s GDP, remains competitive globally and thereby able to contribute to furthering Chile’s economic and societal growth. The upcoming year presents Antofagasta with important capital decisions, notably the construction of a second concentrator at Centinela and we will make these decisions when we have a clearer picture of the Constitution and the mining royalty legislation. Antofagasta’s 2022 performance Our performance reflected the challenges of a difficult operating environment with copper production falling and net cash costs increasing, and revenue of $5.9 billion and $2.9 billion of EBITDA. We ended the year strongly, with our performance improving in key areas, from lower cash costs to increased production, compared with the first half of the year. Antofagasta plc Annual Report 2022 7 Strategic Report / Letter from the Chairman continued Transport division Vivianne joined the Board in 2014 and since then, half of our Board It was a strong year for our Transport division, which had a record year appointments have been female, with women currently comprising 30% for both safety and the tonnage transported. of our Board. However, we aim to increase female representation to 40%, and we are actively working towards this target. The division has been based in the city of Antofagasta for over a century and during this period the city has grown extensively. The location of its Outlook for 2023 facilities and workshops are now in the city centre, providing a The IMF forecasts that global growth will slow in 2023 affected by long-term opportunity to repurpose the area and fully integrate it into the a number of issues, particularly the war in Ukraine, China’s economic future urban development of the city. We have therefore made the performance, the rate of economic growth in the US and Europe, and decision to relocate the facilities and workshop 40 miles north to an the energy crisis. In addition, Chile’s political and economic environment industrial area near the town of Mejillones. further complicates the outlook. We have been making progress and in 2022, prior to beginning the Uncertainty clouds the short-term picture, yet important features of the urban redevelopment, we started the process of converting the former long-term are clearer. The world is moving towards net-zero. That railyard into a historic neighbourhood. This involved us working closely journey will demand more copper, according to some forecasters almost with the local community and authorities to ensure the project meets the 10 million more tonnes over the next decade alone, at a time when the needs of the area and is environmentally sustainable. global copper supply is constrained by declining resource quality and Governance update long lead times for project development and permitting. Our focus This year saw our entire board meet in person for the first time since remains on being a leading, responsible producer of the copper that the early 2020. It also saw our directors make site visits to at least one of low-carbon world requires. our operations, including to the desalination plant and concentrator plant We know that in any environment, the diversity, safety and health of our expansion projects, and to Los Pelambres’ tailings dams. The insights people matter. So do the vibrancy of our culture and the discipline with from these visits were shared at board and committee meetings, which we manage costs. Such steps not only strengthen the core of our deepening the directors’ understanding of our activities. business but position us so that 2023 is not defined by the challenges By the date of our 2023 AGM, Vivianne Blanlot will have served on our we face, but by our responses to them. Board for nine years and, although she has agreed to continue on the Jean-Paul Luksic Board, she will no longer be considered ‘independent’. She has therefore Chairman stepped down from the Nomination and Governance Committee and Remuneration and Talent Management Committee, and has been appointed to the Projects Committee. To fill the vacancies on these committees, Francisca Castro has joined the Nomination and Governance Committee and Eugenia Parot has joined the Remuneration and Talent Management Committee. Antofagasta plc Annual Report 20228 / Letter from the Chief Executive Officer ## Rising to the challenges ## of a transition year It also supports our Diversity and Inclusion Strategy by offering employees a better balance between personal needs and the demands of work. This, in turn, has enabled us to attract and retain more women in the workforce and, by the end of 2022, they represented one in five of our employees, meeting our target for the year. This achievement has encouraged us to set a more ambitious goal for women to represent 30% of the workforce by the end of 2025. Similarly, an improved life-work balance enhances employees’ job satisfaction with knock-on benefits on the organisation’s productivity. So, while we still seek to perfect and refine the hybrid model, it is here to stay and a feature of how we are organising our work going forward. As in other organisations, we have seen an increase in mental health issues arising from the pandemic and have implemented support strategies to identify and help employees suffering from mental illnesses. In a key initiative, we launched our Wellbeing Strategy during the year Iván Arriagada to support people’s physical and emotional welfare. Chief Executive Officer Climate change At Antofagasta, we regard the climate crisis as the greatest environmental emergency of our times. A key priority for us is the Dear shareholders implementation of our Climate Change Strategy, which plans for us to I am pleased to share with you the significant progress we made in be carbon neutral by 2050 at the latest. During the year, we met our 2022 in the areas of project development, climate change, diversity and short-term target of achieving a 30% reduction in greenhouse gas inclusion and, above all, safety. It was a challenging year for our (GHG) emissions by 2025 three years early, and will set a new operations, as expected, but we have been implementing transitions that nearer-term goal in 2023. will drive higher copper production and improved cost competitiveness In a major achievement, in 2022 we were among the first companies in 2023 and future years. in Chile to complete the transition of all our operations to electricity Safety is our top priority and I am particularly pleased to report that we generated exclusively from renewable sourced contracts. The process suffered no serious accidents during the year. We achieved a continuing began in Zaldívar in July 2020, followed by Centinela and Antucoya in reduction in high-potential incidents, which are an important leading January 2022 and finally by Los Pelambres in April. indicator of where more serious incidents might occur, and the rate of Now the main challenge is to reduce and, ultimately, completely replace lost time injuries fell by 37% to 0.84, a record for the Group. the use of diesel at our mines, particularly in haulage trucks which are These positive safety indicators reflect the maturity of our safety heavy consumers of the fuel. We are testing various potential solutions management system, which is based on critical controls, identifying key at our operations, including the use of green hydrogen and electric risks, and promoting the right behaviours among our employees and batteries, to help develop and become early adopters of whichever is the contractors. The year’s strong safety results were also underpinned by winning technology. an increase in on-site verification visits and interaction with teams Our efforts involve close collaboration with suppliers of mining by senior management as COVID-19 restrictions were gradually lifted. equipment, with whom we are also working to calculate and reduce New ways of working emissions in our value chain (Scope 3) that we do not directly control. In 2022, we consolidated our new hybrid way of working, which we In 2022, we began using an internal carbon price and other emission adopted during the pandemic. The model combines in-person and criteria to evaluate bids for contracts as part of growing efforts to remote formats and has several advantages. First, it has made the influence best practice among suppliers. organisation more flexible – and therefore resilient – and more able In another milestone, in October our Transport division became the first to adapt to unexpected events and manage risk. rail Company in Chile to order a hydrogen-fuelled cargo locomotive, which we expect to start operating in 2024. It forms part of a plan to renew our entire fleet. 9Antofagasta plc Annual Report 2022 Strategic Report / Letter from the Chief Executive Officer *continued* #### Water management The evidence of climate change is clear in central Chile, where a severe drought has entered its thirteenth year. In early 2023, we began commissioning the desalination plant for Los Pelambres which will provide a permanent solution to the restrictions on operational water supply caused by the drought. The plan is to double the plant's capacity to 800 litres per second as soon as permitting allows. In parallel, we work closely with communities near Los Pelambres in the Choapa Province, a farming area, to strengthen water management and ensure water availability for human consumption, as well as for irrigation. The desalination plant and its planned expansion will make more water available to the area as we replace current continental water usage with sea water. We already only use sea water for our Antucoya and Centinela operations in northern Chile, the latter fully transitioning from continental water at the end of 2022. By 2025, we expect 90% of our mining operations' water consumption will be recirculated or sea water. #### Responsible production As a copper producer, we supply a key metal to address climate change through its use in low-carbon technologies, such as electric vehicles and the generation of renewable energy and are committed to its responsible and reliable production. In 2022, Los Pelambres and Antucoya were awarded the Copper Mark, an independent external verification of their sustainable practices. Zaldívar and Centinela completed the same assurance process in 2021. #### Operating results As expected, 2022 was a transition year for the Group with the impact of the drought while the desalination plant at Los Pelambres was being completed, which will be in 2023 paving the way for strong growth. We produced 646,200 tonnes of copper, 10% less than in 2021 with the decrease primarily due to expected lower throughput as a result of the drought and planned lower grades at Centinela. ![img-0.jpeg](img-0.jpeg) “We are committed to supplying the copper required for the energy transition.” The Transport division had a good year with total transport volume up by 6% to an all-time record of 7.1 million tonnes, as we increased share of the transport market for mining. We expect the planned renewal of our fleet to low-carbon technologies to maintain this positive trend. For our mining operations, it was a challenging year in terms of unit costs due to general inflationary pressures, particularly for diesel and sulphuric acid in global markets, as well as the temporary decrease in production. We were successful in partially offsetting this trend through our continuous focus on productivity and cost containment, together with the contributions from our gold and molybdenum by-products. Full-year net cash costs came in within guidance at $1.61/lb, compared to $1.20/lb in 2021. It is worth noting that we are implementing important structural changes to contain costs. As an example, our new renewable energy supply contracts are lower cost than the previous fossil-fuel agreements. Our innovation and technology programme is also bearing fruit in this sense. Centinela's and Los Pelambres' new remote operating centres in Antofagasta and Santiago, respectively, are designed to streamline processes from mine to port and reduce transport and mine camp logistics. Productivity will also be enhanced by Centinela's fleet of automated haulage trucks, which successfully started operation during the year. Similarly, the increased processing capacity that will come on-stream in 2023 with the completion of the Los Pelambres Expansion project's fourth milling line will bring further structural cost benefits. These improvements are reflected in our estimated copper production for 2023 of between 670,000 and 710,000 tonnes and will help us counteract the impact of inflation and the expected strengthening of the Chilean peso. Looking ahead, we see strong copper market fundamentals for the foreseeable future. Demand will be supported as the global economic recovery gathers pace coupled with copper's significant role in the energy transition. Supply will remain tight due to the lack of major new discoveries in recent years and the long time it takes to bring new projects online. Projects are also getting technically more complex. Against this backdrop, the Group is uniquely positioned to deliver growth opportunities from its existing large resource base. 10 Antofagasta plc Annual Report 2022 Growth outlook The continued implementation of our Climate Change Strategy will be Our growth strategy to focus on copper, primarily in the Americas, another key focus. During the year, we plan to complete decarbonisation remains unchanged. We are pursuing robust organic growth options roadmaps for our operations, which will help us to define a new embedded in the large mineral resources of our first-tier sites, Los nearer-term emissions reduction target. We will also press ahead on Pelambres and Centinela. The Los Pelambres Desalination Plant and measuring Scope 3 emissions with a view to setting a reduction target Concentrator Expansion projects will be in production in 2023. A second during 2023 or as soon as possible thereafter. phase expansion to extend the mine life beyond 2035 and double We believe the mining industry plays a critical role in Chile’s economic desalination capacity is in the permitting stage. and social development. We are committed to supplying the copper The $3.7 billion investment to build a second concentrator at Centinela required for the energy transition and to further general economic is subject to greater clarity on tax and royalty bills under discussion progress and people’s wellbeing in a responsible and sustainable way, by Chile’s congress and the process to draft a new constitution, and creating value for our shareholders and other stakeholders in Chile and is expected to be put to the Board for approval by the end of 2023. society in general. We expect these growth projects to increase annual copper production Iván Arriagada to approximately 900,000 tonnes, once implemented. Chief Executive Officer On the innovation front, our patented Cuprochlor®-T technology has completed industrial-scale testing and unlocked a solution to economically leach low-grade primary sulphides. It is now being incorporated into our Centinela and Antucoya mine plans. We are also excited by the potential of our Cachorro and Encierro exploration projects in northern Chile whose 765 million tonnes of mineral resources are now included in our resource inventory. Our priorities in 2023 The safety and health of our employees, contractors and local communities will remain our first priority as we build on our positive 2022 performance. We will reach a major milestone with the start of operation of the Los Pelambres Expansion project in 2023. The new desalination plant and expanded concentrator will lift water supply restrictions and increase production in 2023, helping to deliver on our commitment to lower cash costs. On innovation, we will continue to work on introducing more automation in our operations and consolidating our integrated remote operating centres. This focus on changing how we work and transforming the way we do mining will produce more efficiency gains. We are also committed to moving forward the Centinela second concentrator project, subject to the necessary conditions being in place. Antofagasta plc Annual Report 2022 11 Strategic Report / The copper market ## Copper’s critical role ### In 2022, copper price volatility rose to its ### highest levels in over a decade. Growing ### economic uncertainty, rising inflation and ### slowing growth in metal demand was set ### against increasing mine supply disruption. Looking ahead, the prospects for copper demand in the near-term will bind and connect the batteries, motors and electrical networks that will partly depend on how rapidly the Chinese economy recovers following help limit the rise in global temperature. Furthermore, the pressure on the removal of its zero COVID-19 measures. The pace at which interest the world’s resources to achieve this structural change will be rates will rise and subsequently fall, and economic growth rates in transformational. North America and Europe will also be key factors. Visible inventories Electric vehicles are expected to be by far the largest single sector were at historically low levels at the beginning of 2023, and this will contributing to the boost in green demand for copper over the next two sustain price volatility. decades, with global EV sales growing three-fold in three years. Potentially, the stronger growth in mine production forecast over the Government subsidies in China, the US and Europe have helped to next two years could alleviate the current market tightness. However, support greater market penetration. The plants that will provide the there are ongoing risks of disruption and the operating environment in copper foil for batteries are being developed apace across Asia, North major producing countries remains uncertain. Beyond the middle of the America and Europe (and close to the battery hubs) and further copper decade, the rapid uptake of copper-intensive clean technologies will foil manufacturing capacity is scheduled for completion over the next underpin future copper demand as the world looks to a greener and few years to meet anticipated demand. more sustainable future. As with the automobile market, the decarbonisation of power generation Copper’s critical role in a net-zero pathway is well underway. Global wind power generation capacity has increased To put the world on a Paris Agreement net-zero pathway, a very by over 40% in the last three years. Cable makers are expanding significant build out of low-carbon electric vehicles (EVs) and renewable capacity in North America and Europe to meet the necessary growth power generating capacity will be needed. As the world reduces its in electrical networks. Rising offshore wind generation developments dependence on hydrocarbons, metals will provide the foundation for are in turn supporting copper wire rod demand. The use of copper a zero-carbon economy. Copper in the form of wire, cable and foil will in solar power generation is also just as impactful as wind. ### Copper consumption growth 50 45 Copper (Mt) 40 35 30 25 2020 20382023 2026 2029 2032 2035 Green End Uses - EVs, Renewables, Energy Storage Other End Uses Source: Wood Mackenzie Antofagasta plc Annual Report 202212 The transition to a more electrified world and higher electricity output Supply challenges will require power grid upgrades and expansions, connected by wire Substantial growth in new mine supply will be needed to meet zero and cable. This will lead to higher demand growth for refined copper carbon targets. The industry will have to deliver new projects at a intensive wire rod. frequency and with a consistent level of investment never previously accomplished. These pressures are all in addition to the constant upward pressure from global population growth and the increased consumption per According to one leading forecaster’s base case outlook, over six million capita that will arise with increased urbanisation. tonnes of new mine supply will be required over the next decade from projects that have yet to be sanctioned. Under an accelerated energy What does the energy transition mean for regional demand? For more transition scenario, whereby the Paris Agreement targets are met and mature markets including Europe and North America, legislation such as zero carbon is achieved by 2050, the requirement jumps to over nine the recently approved Inflation Reduction Act (IRA) in the US will ensure million tonnes. This is equivalent to nearly a third of current refined an uptick in end-use demand from this stimulus for increased green consumption. This estimate of new mine supply requirements also energy use. This demand will be fulfilled by a return to domestic, assumes a larger contribution of recycled material to meet refined downstream manufacturing. For developing Asian regions, such as demand, which would require investment in more scrap processing ASEAN and India, the conventional drivers of low-cost production, capacity and a significant increase in scrap availability. urbanisation and industrialisation are still at play. The energy transition will further strengthen copper demand in these markets. ### Volume of copper committed to in new projects each year Copper price ($/t) 2.5 10,000 8,000 Copper (Mt) 1.5 6,000 1.0 4,000 2.0 0.5 2,000 0 2007 2010 2013 2016 2019 2022 Mtpa Cu LME Copper Price Source: Wood Mackenzie, LME Antofagasta plc Annual Report 2022 13 0.0 Strategic Report / The copper market continued ## “Demand for copper is ## growing and the industry’s ## ability to satisfy this ## growth is stretched.” There are limitations to the speed at which scrap can be delivered back One important source of future copper production will be expanding into the product cycle in large volumes, especially as the world looks to existing mining operations. These brownfield projects are usually less manufacture products that are made to last and that can be repaired and capital intensive than greenfield projects and require less capital shifts away from the throwaway culture of recent years. The mismatch investment. All mines strive to optimise their unit operating costs and between the requirement for new supply and the need to meet the this is often achieved through productivity improvements, with challenges of a decarbonised world will lead to considerable pressures investment in debottlenecking and expansions. These increases in in the copper sector over the next decade. production are an important source of future production. Estimates of total identified global mineral resources appear sufficient to Assuming the average capital intensity of the project pipeline, and taking satisfy future demand but in practice the conversion of these resources into account the volume of copper required to achieve zero-carbon to operating mines is uncertain and slow. Many were identified decades climate targets, one leading forecaster estimates that the level of ago and still have little likelihood of being developed. The better quality, investment needed to deliver new projects over the next 30 years will easier to develop deposits have mostly been built. Current mineral have to be at a rate only previously achieved between 2012 and 2016, resources tend to be of lower quality and smaller than those already at the back end of the China-induced commodity super cycle. developed. Some have not been developed because of poor economics. In view of this challenging backdrop, mining project approval rates have But even those that can offer an attractive return on investment often fallen to cyclical lows. In 2022, the volume of committed copper projects have other hurdles to overcome before they can be developed. was well below the level needed to meet the requirements of an One of the key characteristics of a deposit is its grade, or the accelerated energy transition, despite copper prices having been close concentration of copper in the deposit. Average grades have been to their highest level for a decade. declining for decades, not just for new mining operations but existing The implication is that more projects need to be advanced along the ones as well. The grade declines at existing mines because grade often pipeline and quickly, or there will be insufficient copper available to meet declines with depth for geological reasons. The grades of new mines demand, even under a base case pathway. decline as higher-grade deposits are mined first. Demand for copper is growing and the industry’s ability to satisfy this For a new mine, obtaining the necessary social and environmental growth is stretched. Considerable efforts are required to overcome permits can take a significant time, even in major producing countries. these challenges including those to boost productivity through innovation Many sites are remote and require substantial investment in and investment while continuing to satisfy social and environmental infrastructure, including power, water and transport. Project lead times requirements about how mines are developed. are longer and timing is critical as the race to control climate change gathers pace. It can take 10 to 15 years, or longer for a major project The industry will continue to strive to satisfy demand while being to be developed, from the identification of a resource to development. responsible producers for a changing world. The investment needed to produce a tonne of copper has also been steadily rising. The current inflationary environment is one reason. But a more fundamental change is the decline in grades. The cost of producing one tonne of copper is also increasing and projects need to scale up to The pathway to net zero the greatest extent possible relative to the size of the deposit in order to improve the economics. This raises the initial capital cost, often limiting In March 2023 the International the list of potential developers to those that can afford multi-billion-dollar Copper Association published upfront costs. a report setting out the copper industry’s roadmap to net zero, including an outline of the role of copper and the industry’s decarbonisation challenges. antofagasta.co.uk/ ica_zero Antofagasta plc Annual Report 202214 ### The year in review Gold During 2022 gold prices were affected by the contrasting effects of Copper persistently high inflation and central banks raising interest rates to battle The copper price started the year strongly reaching an historic high soaring consumer prices. Central banks were also buyers in the market in March of $4.87/lb before falling to a low of $3.18/lb in July and with purchases during the year reaching a 55 year high. recovering to close the year at $3.81/lb. In February 2022, gold prices increased to near-record levels of Copper’s price fluctuations reflected the broader volatility in the global $2,000/oz as Russia invaded Ukraine, but a strong US dollar and economy. Though the details differed in important ways for each major aggressive interest rate increases by central banks led to a fall of over economy, their growth was similarly dampened in 2022. Driving the 20% by September 2022. However, from late 2022 to early 2023, gold slowdown were headwinds that dominated headlines for much of the saw a trend reversal with the gold price rising by 14% since November year: Russia’s invasion of Ukraine and the economic shockwaves and 2022, supported by a less hawkish tone from the US Federal Bank and energy crisis it sparked; rising inflation and interest rates; the lingering the reopening of China's economy. effects of COVID-19; China’s reduced economic activity; and the ongoing supply shortages and strained global supply chains. The market price of gold averaged $1,800/oz in 2022, compared with $1,799/oz in 2021. Over the year the LME copper price averaged $4.00/lb, 5% lower than in 2021. The average realised copper price for 2022 was $3.84/lb. Molybdenum The copper market started 2023 strongly but faded as economic and The molybdenum price started 2022 at historically high levels and was geopolitical uncertainty increased. Looking forward, the strength of the initially stable, in a balanced market. As the year progressed, market will depend on the recovery of the Chinese market and whether consumption in China grew steadily and production declined moving there are any disruptions to global trade. the market into deficit and towards the end of the year the price began to rise significantly. The average annual price in 2022 was $18.7/lb, with a monthly low for the year of $15.1/lb and a monthly high of $26.1/lb, before reaching LME Copper average price a price of $30/lb in the last days of December. There are some primary producers of molybdenum but a substantial share of demand is satisfied from mines that produce molybdenum as ## $4.00/lb a by-product, and recycled scrap. By-product producers are generally insensitive to the molybdenum price and demand for molybdenum- containing steels is expected to be strong, factors that are expected to support the molybdenum price during 2023. Gold average price ## $1,800/oz Molybdenum average price ## $18.7/lb Antofagasta plc Annual Report 2022 15 Strategic Report / Business model ## Delivering value for our stakeholders ## through the mining lifecycle ### 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. ## WHAT WE NEED | Long-term relationships | Resources | Responsible mining | | --- | --- | --- | | Our people | World-class assets | We believe it is possible to mine sustainably | | Approximately 31,000 employees and | We have a portfolio of large, high-quality, | by prioritising environmental protection | | contractors. Constructive relationships, | low-cost assets. We are investing in | and the efficient use of natural resources. | | anchored in mutual respect and transparency, | technology to improve productivity and drive | | | are crucial for a good working environment | sustainable growth across our operations. | | and talent retention as well as for productivity Inputs and efficiency. Our mining operations depend on a range Communities of key inputs such as energy, water, labour, The wellbeing of our neighbours is directly sulphuric acid and fuel. related to the sustainable development and Financial resources success of our business. We have a strong balance sheet and a large Suppliers portfolio of available undrawn credit facilities. We work with on average over 1,700 suppliers, who provide a broad range of For more information on products and services, from large mining our operations see P74-85 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 pay special attention to our communications with them, maintaining fluent and transparent dialogue 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 P38-73 Antofagasta plc Annual Report 202216 ## WHAT WE GENERATEWHAT WE DO ### Our products Copper ## 646,200 tonnes Gold ## 176,800 ounces Molybdenum | Exploration / Acquisition | Extraction and processing | | | --- | --- | --- | | We undertake exploration activities in Chile and | Safety and health, operating efficiency | | | abroad, with particular focus on the Americas. | and innovation are all key elements of how | 9,700 tonnes | we run our operations. Silver ## 2.8 million ounces For more information on our products see P76 ### Our footprint CO e emissions intensity 2 ## Evaluation Sales and marketing 1.75 tCO e/tCu ### 2 We integrate sustainability criteria into the We build long-term relationships with the Continental water withdrawal design process and project evaluation phase, smelters and fabricators who purchase our developing innovative solutions for challenges products, with approximately 60% of output ## 39.7 GL such as water availability, long-term energy by value going to Asian markets. supply and community relations. For more information on our footprint see P57-66 ### Our outcomes Total economic contribution ## $7,445m We generate economic value for all our stakeholders, distributing it as wages to employees, purchases of goods and services Construction Mine closure and rehabilitation to suppliers, social investment programmes This stage requires significant input of capital At the end of a mine’s life, it must be closed in communities, taxes to governments, and resources as well as effective project and remediated according to the international dividends to shareholders and interest management and cost control to maximise the standards and national regulations in force payments to lenders. project’s return on investment. at the time. For more information on our outcomes see P41 Antofagasta plc Annual Report 2022 17 Strategic Report / Our strategic framework ## How we deliver ## 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. ### Our purpose For whom we want to achieve our purpose ## Planet ## Developing mining 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, ## for a better future with copper playing a central role in the energy transition, economic progress and improved livelihoods. ## 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. ## 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. ## 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. Antofagasta plc Annual Report 202218 ### How we will achieve this Through our five strategic pillars ## Safety and People and Competitiveness Innovation Growth ## Sustainability culture to enhance our current to cultivate the is key to us achieving to constantly pushing to keep contributing operations, while talent necessary excellence and creating back boundaries and to the development keeping an eye for a better future long-term value exploring new ways of a better future on the future of advancing For more information on our strategic pillars see P20-21 Underpinned by our values Respect for others Excellence in our performance We respect people and care about their opinions, which is why we We continually seek to achieve the best possible results through engage in an open, transparent and collaborative way. We trust them operational discipline. We look after our resources and we are efficient, and have a genuine interest in their wellbeing. We promote a work austere and honest. We build trust by fulfilling our commitments. environment that fosters diversity and inclusion. Innovation as a permanent practice Responsibility for safety and health We recognise and promote new ideas that improve our work practices We are responsible for our own safety and health, as well as for that and the way we relate to others. We aim to create value for the of others. We identify and control our risks, and we are aware of the organisation, people and the environment. impacts of our actions. Forward thinking Committed to sustainability Our business strategy aims to generate value with a long-term vision for We operate responsibly and efficiently, with long-term vision. shareholders and other stakeholders. We learn from our mistakes and We maximise the economic value of our assets, contribute to social have the flexibility and courage to face new challenges. development and minimise our environmental impacts. Antofagasta plc Annual Report 2022 19 Strategic Report / Our strategic framework continued ## Our strategic pillars ### Our strategy is built around five pillars, each of which has defined long-term objectives ### with short- and medium-term goals. ### Safety and People ### Competitiveness ### Sustainability and culture Emphasising safety and sustainability Investing in people and fostering a positive Our competitiveness is key to us achieving to enhance our current operations, culture to cultivate the talent necessary excellence and creating long-term value. while keeping an eye on the future. for a better future. Description Description Description We aim to create value and growth throughout Our goal is to create and nurture a working Competitiveness is essential as it ensures the mining lifecycle, from exploration to mine environment that incorporates new ways of resilience and makes the business viable. closure. Our goal is to be a Company known thinking, with innovation at the forefront, to By producing copper efficiently we are able to for its ethical and transparent conduct, tackle current and future challenges. We strive grow and contribute to the development of respectful of human rights and the law. to inspire people to tackle more complex and mining while promoting the energy transition. To achieve this, we are determined to continue dynamic problems, and to develop new We aim to maintain our strong financial to develop a comprehensive and long-term management approaches to solve them. The position through efficient capital allocation, commitment to all our stakeholders, demands of today’s and tomorrow’s adaptive the proper execution of our projects and the particularly our communities and workers. challenges require us to collaborate and excel renewal of our asset portfolio, allowing us while developing new skills. We align ourselves with the UN Sustainable to continue operating and growing as we Development Goals (SDG), developing We aim to truly understand what our people address increasingly complex challenges. responsible mining practices that are certified value, to treat them fairly, and to engage and We strive to be one of the most cost- by the Copper Mark and ICMM’s Performance inspire them based on their personal competitive companies in the industry, and Expectations. We prioritise the efficient use of motivations and unique qualities as individuals. towards that end, we are dedicated to renewable natural resources and the This is a challenge that requires us to change achieving excellence in our work and seeking reduction of our greenhouse gas (GHG) the understanding of the traditional new and efficient ways to manage our emissions by using sea water and energy employment relationship to one of deeper operations. from cleaner sources. commitment to the Company. Additionally, we are undergoing a process of All of this is done while ensuring the We will continue to drive forward our cultural operational transformation that allows us to occupational health and safety of all our transformation, promoting the organisation as integrate technology and innovation, utilise employees and contractors. We do this a safe and supportive space that actively data analytics and promote efficient resource through the active leadership of our workers, listens, empathises, connects and builds management by strengthening key operational who by their responsible behaviour and strong relationships with our people. processes that will enable us to achieve the proactive management of risks and critical full potential of our assets’ performance. controls ensure a safe and healthy working environment for all. Key initiatives Key initiatives Key initiatives • Climate Change Strategy • Diversity and Inclusion Strategy • Cost and Competitiveness Programme • Social contribution • Leadership brand • Full potential • Health and Safety Control Strategy • Digital Academy • Operational excellence | Performance | Performance | Performance | | --- | --- | --- | | • Zero fatal accidents since July 2021 | • Wellbeing Strategy rolled out | • Copper production of 646,200 tonnes | | • 35% reduction of High Potential Incidents | • 20.4% of our employees are women | at a net cash cost of $1.61/lb | | • 100% renewable energy (Mining division) | • Inclusive practices are an integral part | • EBITDA margin remains strong at 50% | | • All operations had achieved the Copper | of how we work | • Our Cost and Competitiveness Programme | | Mark accreditation by the end of 2022 | | achieved more than double its target, | yielding benefits of $124 million • $57m investment in social value creation Read more Read more Read more on P38-73 on P48-50 on P90-93 Antofagasta plc Annual Report 202220 ### Innovation Growth Through innovation we are constantly Growth to continue contributing committed to pushing back boundaries to the development of a better future. and exploring new ways of advancing. Description Description We aim to create new ways of operating and Growth enables us to maintain our viability and using existing technology more effectively, fulfil our purpose. It allows us to realise the full incorporating our own and others’ learning potential of our resources and assets, creating to improve performance. additional value and diversifying risk. We further aim to discover new ways of To accomplish this, we aim to: advancing our operations through technology • Expand and increase the Group’s that is yet to become available. With our production capabilities by building projects experience we are convinced that we can such as Los Pelambres Expansion Phase 1 contribute to the development of new solutions and Phase 2 (mine life extension) and the ® such as Cuprochlor -T, integrated remote Centinela Second Concentrator project. operation centres (IROCs), autonomous • Increase our mineral resource base through haulage and drilling, advanced analytics the exploration for new resources and/or and data management for decision making, the development of new ore deposits such robotics for tailings and water management, as Cachorro and Encierro. decarbonisation of our processes and dust suppression. Our strategy for growth beyond our existing operations is focused on producing copper Our Innovation Roadmap serves as a guide and its by-products in the Americas for the Group to achieve our operational vision (particularly Chile, Peru, the United States and for the future. This allows our operations to Canada), a region that is highly attractive due become smart, integrated and sustainable, to its geological potential, mining activity, optimising the use of strategic resources such relative proximity, political and administrative as water and energy. similarities, culture and language. | Key initiatives | Key initiatives | | --- | --- | | • Integrated Remote Operations Centres | • Los Pelambres Expansion Phase 1 | | • Autonomous trucks and drilling | • Centinela Second Concentrator | ® • Cuprochlor -T • Los Pelambres Expansion Phase 2 | Performance | Performance | | | --- | --- | --- | | • Inaugurated our first fully autonomous | • At the end of 2022 the Los Pelambres | | | operation at the Esperanza Sur pit | Expansion project was 93% complete | | | • New integrated remote operations centres | • Following two exploration discoveries in | | | for Los Pelambres and Centinela | Chile our mineral resources have increased | For further information on the risks | associated with each strategic pillar, • Validated our proprietary primary sulphides by 1 billion tonnes please see P26-35 ® leaching technology (Cuprochlor -T) For more information on how we align our strategic performance with Read more Read more remuneration, please see our on P92-93 on P86-89 Remuneration report on P147 Antofagasta plc Annual Report 2022 21 Strategic Report / Key Performance Indicators ## Measuring our performance ### 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: ### Financial KPIs 1 1 EBITDA Profit before tax Net debt/(Net cash) ## $2,930m $2,559m $886m 4,836 3,477 886 2,559 2,930 2,739 2,439 596 563 2,228 1,349 1,413 1,253 82 | Why it is important | Why it is important | | | | --- | --- | --- | --- | | This is a measure of our underlying | This is a measure of our profitability before | | (541) | | profitability. | the deduction of taxes. | | | | Performance in 2022 | Performance in 2022 | Why it is important | | | EBITDA decreased by 39% and an EBITDA | Profit before tax decreased by 26%. | This measure reflects our financial liquidity. | | margin of 50%, reflecting the decrease in Performance in 2022 copper sales, lower copper price, higher Strong balance sheet with net debt of $886 inflation and higher input prices. million at the end of 2022 and a Net debt/ EBITDA ratio of 0.3x. Find out more Find out more Find out more P94 P94 P100 1. Non-IFRS measures, refer to the alternative 2 3 Underlying earnings per share Earnings per share performance measures section on page 238. 2. From continuing operations excluding ## exceptional items. $59.7¢ $155.5¢ 3. From continuing and discontinued operations including exceptional items. 142.5 155.5 4. 100% of Los Pelambres, Centinela and Antucoya, and 50% of Zaldívar’s production. 130.9 5. Mineral resources (including ore reserves) relating to the Group’s subsidiaries on a 100% basis and Zaldívar on a 50% basis. 59.7 51.5 50.9 54.7 6. The Lost Time Injury Frequency Rate is the 55.1 50.9 51.3 number of accidents with lost time during the year per million hours worked. 7. Scope 1 and 2, Mining division only. 8. Tonnes of CO equivalent per tonne of copper 2 Why it is important Why it is important produced. | These are measures of the profit attributable | These are measures of the profit attributable | | --- | --- | | to shareholders before exceptional items. | to shareholders after exceptional items. | | Performance in 2022 | Performance in 2022 | | Underlying earnings per share were | Earnings per share including exceptional items | | 59.7 cents, a decrease of 82.8 cents or 58% | for the year were 155.5 cents, reflecting the | | compared with 2021 on lower EBITDA. | impact of an exceptional gain of 95.8 cents, | and were 19% higher than in 2021. Remuneration performance Find out more Find out more criteria P156 P99 P99 Antofagasta plc Annual Report 202222 20222021202020192018 20222021202020192018 20222021202020192018 20222021202020192018 20222021202020192018 ### Operating KPIs | | | | | 4 | | 1 | | | | | | 5 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Copper production | | | | | Net cash costs | | | Mineral resources | | | | | | | 646.2k tonnes | | | | | $1.61/lb | | | 20.1bn tonnes | | | | | | | | | 770.0 | | | | | 1.61 | | | | | | 20.1 | | | 725.3 | | 733.9 | 721.5 | | | | | 18.8 | 19.1 | 19.2 | 19.1 | | 646.2 1.29 1.22 1.20 1.14 | Why it is important | | Why it is important | | Why it is important | | | --- | --- | --- | --- | --- | --- | | Copper is our main product and largest source | | This is a key indicator of operating efficiency | | Our mineral resource base supports our | | | of revenue. | | and profitability. | | strong organic growth pipeline. | | | Performance in 2022 | | Performance in 2022 | | Performance in 2022 | | | Copper production decreased by 10% mainly | | Net cash costs were 34% higher than last | | Total mineral resources increased by 1 billion | | | due to the temporary reduction in throughput | | year mainly due to the impact of the drought, | | tonnes during the year, including a maiden | | | at Los Pelambres as a result of the drought | | inflation and higher input prices during the | | inferred resource at Encierro and additional | | | and the reduced concentrate pipeline | | period, partly offset by the weaker Chilean | | resources at Cachorro, both of which are | | | availability in June, and expected lower grades | | peso and the savings coming from our Cost | | in northern Chile. | | | at Centinela Concentrates. | | and Competitiveness Programme. | | | | | | Find out more | | Find out more | | Find out more | | | P76 | | P76 | | P245 | ### Sustainability KPIs 7,8 Safety Water withdrawals CO e emissions intensity 2 Continental water 6 ## 0 Fatalities 0.84 LTIFR 73 GL Sea water 1.75 tC0 e/tCu ### 2 1.6 39.7 3.33 1.3 38.9 37.7 3.10 36.8 1 1 32.6 2.79 2.56 1.0 0.9 | 0.84 | | | | | | 1.75 | | --- | --- | --- | --- | --- | --- | --- | | | | | | 31.3 | 33.1 | | | | 28.9 | 28.2 | 29.0 | | | | 0 0 0 Why it is important Why it is important Why it is important Safety is our top priority, with fatalities Water is a precious resource and we are We recognise the risks and opportunities 6 and the LTIFR being two of our principal focused on using the most sustainable sources arising from climate change and the need measures of performance. and maximising its efficient use. to measure and mitigate greenhouse gas (GHG) emissions. | Performance in 2022 | Performance in 2022 | | | | --- | --- | --- | --- | | Record safety performance with no | Total water withdrawals increased by 5.4% as | Performance in 2022 | | | fatalities and the LTIFR improving by 37% | precipitation tripled at Los Pelambres in 2022 | CO | e emissions intensity decreased as Scope | 2 due to strengthened control strategies for from the low levels in 2021, and Centinela 1 and 2 emissions fell by 37%. high-risk tasks. Concentrates and Antucoya achieved record annual throughput. Find out more Find out more Find out more P53 P63 P61 Antofagasta plc Annual Report 2022 23 20222021202020192018 20222021202020192018 20222021202020192018 20222021202020192018 20222021202020192018 20222021202020192018 Strategic Report / Risk management ## Risk management framework • Updated the Company’s risk appetite statement, including the sections ### Effective risk management is an essential relating to Environmental Management, Operations and Tailings ### part of our culture and strategy. Storage, and the Project Execution risk section was expanded to incorporate the conversion of mineral resources to ore reserves. ### The accurate and timely identification, The updated statement was approved by the Board and the level ### assessment and management of principal risks of risk appetite for all risk areas was unchanged ### give us a clear understanding of the actions • Reported monthly to the Executive Committee to identify and manage ### required to achieve our objectives. any deviation from expected performance • Defined and implemented lessons learned from the COVID-19 Key elements of integrated risk management pandemic We recognise that risks are inherent to our business • Tested and validated the Business Continuity Plan Only through adequate risk management can internal stakeholders • Introduced new controls identified during the assessment of be supported in making key decisions and implementing our strategy the impact of the conflict in Ukraine Exposure to risks must be consistent with our risk appetite • Participated in the review of the FQAR (Functional Quality Assurance The Board defines and regularly reviews the acceptable level of Review) project exposure to emerging and principal risks. Risks are aligned with our • Continued training risk owners and main users risk appetite, taking into consideration the balance between threats • Updated and monitored critical controls and action plans and opportunities • Prepared new action plans to maintain risk exposure within We are all responsible for managing risks acceptable limits Each business activity carries out risk evaluations to ensure the sound • Embedded timely and comprehensive risk analysis into each identification, management, monitoring and reporting of risks that could relevant decision-making process impact the achievement of our goals • Shared best practices across our operating companies Risk is analysed using a consistent framework Our risk management methodology is applied to all our operating Governance companies, projects, exploration activities and support areas so that we The Board has overall responsibility for risk management and have a comprehensive view of the uncertainties that could affect the determines the nature and extent of the principal and emerging risks achievement of our strategic goals. The framework is based on that we will accept in order to achieve our strategic objectives. 1 ISO 31000 and COSO ERM. The Board receives detailed analysis of key matters in advance of Board We are committed to continuous improvement meetings. This includes: reports on our operating performance including Lessons learned and best practices are incorporated into our safety and health, financial, environmental, legal and social matters; procedures to protect and unlock value sustainably key developments in our exploration, project and business development activities; and information on the commodity markets, updates on talent Areas of focus and development during 2022 management and analysis of financial investments. Our main focus in 2022 was in the socio-political environment, as The provision of this information allows the early identification of a result of the armed conflict in Europe and political uncertainty in potential issues and the assessment of any necessary preventive Chile. The latter continued following the rejection of the proposed and mitigating actions. new constitution in September and will extend into 2023 as a second rewrite is carried out. However, lessons learned during previous social The Audit and Risk Committee assists the Board by reviewing the contingencies in Chile meant the impact on our operations was minor. effectiveness of the risk management process and monitoring principal and emerging risks, preventive and mitigation procedures, and action The war in Ukraine affected the sourcing of some of our strategic plans. The Chairman of the Committee reports to the Board following supplies and it remains a concern, although our risk analysis of the each Committee meeting and if necessary the Board discusses the war allowed us to mitigate its impact on our business. matters raised in more detail. Other risks during the year included those arising from the reform These processes allow the Board to effectively monitor Antofagasta’s of the mining royalty and tax bills proposed by the government, expected major risks and preventive and mitigating procedures, and to assess to be implemented during 2023. whether actual exposure is consistent with the defined risk appetite. We maintained our commitment to review and update our principal If a gap is identified, an action plan is prepared to fill it. risks according to our risk methodology. These are some of the actions The Risk and Compliance Management Department is responsible that our Risk and Compliance Management Department undertook for the Group’s risk management systems. It implements the Company’s during the year: risk management policy, vision and purpose to ensure there is a strong • Implemented on-site risk reviews of certain selected risk areas risk management culture at all levels of the organisation. accompanied by senior management, increasing the risk maturity The Department supports business areas in analysing their risks, level of the Group identifying existing preventive and mitigating controls and defining • Co-coordinated contingency committees in line with our risk further action plans. It maintains and regularly updates the Company’s management process risk register. 1. The Committee of Sponsoring Organizations of the Treadway Commission Enterprise Risk Management framework Antofagasta plc Annual Report 202224 The General Manager, with the Department support, reports twice a Risk Management Cycle year to the Audit and Risk Committee on the overall risk management Risk appetite is the expression of the acceptable exposure to process, with detailed updates on principal risks, mitigation activities and uncertainties that the organisation is willing to assume in the pursuit actions taken in each company. of its objectives. Our risk management cycle has four stages, and is designed to identify, assess, treat and follow up our risks. 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 k A p p e t i ### i s t e ### R 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 risk workshop, at which the business 1. Identify 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 2. Assess operations and/or negatively affect potential future growth. Mitigation techniques for significant strategic and business unit risks are reviewed quarterly by the Risk and Compliance 3. Treat 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 4. Follow Up to the centre and from the Board back to the business units. ### 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. Antofagasta plc Annual Report 2022 25 Strategic Report / Risk management continued ## Principal risks | We maintain a risk register through a robust | | | Change | | --- | --- | --- | --- | | | | Risk | in risk level | | assessment of the potential principal risks that | Risk area Appetite | level | vs 2021 Outlook | | could affect the Company’s performance. | People | | | 1. Talent management ### This register ensures that principal risks are 2. Labour relations ### identified in a thorough and systematic way Safety and sustainability ### and that agreed definitions of risk are used. 3. Safety and health Risk management 4. Environmental management We are aware that not all risks can be eliminated and that exposure 5. Climate change to some risk is necessary in the pursuit of our corporate objectives. 6. Community relations Mining is a long-term business and, as part of the principal risks update 7. Political, legal and regulatory and evaluation process, we identify new or emerging risks which could 8. Corruption impact the Company’s sustainability in the long run, even if there is only limited information available at the time of the evaluation. Competitiveness 9. Operations Any identified new or emerging risks that could impact our long-term strategic objectives are included in the principal risk analysis and are 10. Tailings storage reviewed and monitored periodically by the Board. As new information 11. Strategic resources becomes available, based on research, expert analysis and internal 12. Cyber security investigations, suitable controls and action plans are defined and 13. Liquidity incorporated into the Company’s risk matrix. 14. Commodity prices We identify, assess and manage the risks critical to the Company’s and exchange rate success. Overseeing such risks protects our business, people and Growth reputation. The risk management process provides reasonable 15. Growth of mineral resource assurance that the relevant risks are recognised and controlled, allowing base and opportunities the Company to achieve its strategic objectives and create value. Because risks are periodically re-evaluated, the risk map shown here 16. Project development represents the position and controls in place at a specific point in time, and execution as well as showing the changes that have taken place since 2021. Innovation Throughout the year, the Board carried out a robust assessment of 17. Innovation and digitalisation the Company’s emerging and principal risks, which are set out on the following pages with related preventive and mitigation measures. Transversal During 2022, the probability of the External Risks principal risk (18) 18. External risks was lowered from “Possible” to “Unlikely” following the reduction of Key risks related to the COVID-19 pandemic. The impact of the Political, Legal and Regulatory principal risk (7) was reduced from “Significant” Risk appetite Risk level to “Moderate” following the rejection of the proposed new constitution and the improved clarity on the outcome of the mining royalty reform. Low Medium High Very high Strategic pillars Safety and Sustainability People and culture Competitiveness Innovation Growth Antofagasta plc Annual Report 202226 ### Risk Heat Map 8 10 9 11 SevereSignificantModerateLowVery low 6 14 3 12 13 4 15 75 IMPACT 18 16 17 1 2 Movement since previous year Very unlikely Unlikely Possible Likely Almost certain PROBABILITY 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 / Safety and Health / Environment / Communities / Legal / Reputation • Any incident with an impact of more than 50% of EBITDA. • Accident causing multiple fatalities or permanent disabilities. Severe • 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. • Any incident with an impact of between 20% and 50% of EBITDA. • Accident that causes a single fatality or permanent disability. Significant • 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. • Any incident with an impact of between 10% and 20% of EBITDA. • Accident resulting in lost time. Moderate • 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. • Any incident with an impact of between 5% and 10% of EBITDA. • Accident without lost time. Low • Minor environmental or community impact. • Regulatory breaches which may result in a financial impact of less than 0.05% of EBITDA. • Moderate claims and in national news for a short-term period. • Any incident with an impact of less than 5% of EBITDA. • Minor occupational accident. Very low • 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. Antofagasta plc Annual Report 2022 27 Strategic Report / Risk management continued The principal risks, together with related prevention and mitigation ### Defining risk appetite is key in embedding measures, have been presented to the Board and are grouped in line ### the risk management system into our with our strategic pillars: People, Safety and Sustainability, ### organisational culture. Competitiveness, Growth and Innovation. These pillars are supported by our corporate governance structures. ### The Company’s risk appetite statement helps The principal risks are outlined in the risk heat map and table on the ### to align our strategy with the objectives of previous two pages, and in more detail below. ### 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. Description Preventive and mitigation measures Highlights | 1. TALENT MANAGEMENT | | Risk appetite | Risk level | Outlook | | --- | --- | --- | --- | --- | | Managing talent and | We develop the talents of our employees through training and | Our methodology for identifying and managing | | | | maintaining a high-quality | career development, invest in initiatives to widen the talent pool | talent to look for the competencies we require to | | | | labour force in a fast- | and are committed to our diversity and inclusion policy. | ensure the sustainability of our business, allows | | | | changing technological and | | us to identify the key people for our talent pool. | | | Through these actions we aim to increase employee retention cultural environment is a key and add to the number of women, people with disabilities and We embedded our New Ways of Working model priority for us. Any failures employees with international experience in the workplace. (hybrid), which was introduced in 2021 to could have a negative impact facilitate business continuity and attract and on the performance of our Our Employee Performance Management System is designed retain talent. existing operations and to attract and retain key employees by creating suitable and prospects for growth. competitive reward and remuneration structures and providing This year, our Diversity and Inclusion Strategy personal development opportunities. We have a talent has increased the proportion of our female management system to identify and develop internal candidates employees to 20.4%, 3.2 percentage points for key management positions, as well as selecting suitable higher than in 2021. external candidates when appropriate. | 2. LABOUR RELATIONS | | Risk appetite | Risk level | Outlook | | --- | --- | --- | --- | --- | | Our highly-skilled workforce | We maintain good relations with our employees and unions, | Three-year labour agreements were | | | | and experienced management | founded on trust, regular dialogue and good working conditions. | successfully negotiated with two of the unions | | | | team are critical to our | We are committed to safety, non-discrimination, diversity and | at Antucoya, one at Los Pelambres and one at | | | | current operations, | inclusion, and comply with Chile’s strict labour regulations. | Zaldívar, all of them in a climate of mutual | | | | implementing development | | respect. | | | There are long-term labour agreements (usually three years) projects and achieving in place with all the unions at our operations, which helps long-term growth without ensure labour stability. major disruption. 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. Antofagasta plc Annual Report 202228 Description Preventive and mitigation measures Highlights | 3. SAFETY AND HEALTH | | Risk appetite | Risk level | Outlook | | --- | --- | --- | --- | --- | | Safety and health incidents | Our Safety and Occupational Health Strategy is based | We had no fatalities during 2022. | | | | could result in harm to our | on four pillars: | | | | Our lagging indicators continue to fall and were employees, contractors and 1. Safety and health risk management: workers at all levels are below our targets for the year. local communities. Ensuring trained to identify hazards and controls, so that all jobs are their safety and wellbeing is This year we put extra effort into promoting the carried out safely. our ethical obligation, and one correct use of our Job Safety Analysis tool, to 2. Leadership: all employees and contractors are health and of our core values. help supervisors and operators standardise safe safety leaders and we demonstrate our commitment through working practices for high-risk tasks. A poor safety record or each individual’s responsible behaviour. a serious accident could have After dealing with the COVID-19 aftermath, we 3. Contractor management: our contractors are an integral part a long-term impact on morale refocused on occupational health and updated of our safety team and safety culture, which we work and on our reputation and our medical surveillance programmes. This together to improve. productivity. included putting more preventative controls 4. Reporting, research and learning from our accidents: in place to reduce exposure to our main we share good practices and learn from our mistakes. occupational health risks-noise and dust. 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. | 4. ENVIRONMENTAL MANAGEMENT | | Risk appetite | Risk level | Outlook | | --- | --- | --- | --- | --- | | An operating incident that | We have a comprehensive approach to incident prevention. | We have strengthened our environmental | | | | impacts the environment | Risks are assessed, monitored and controlled to achieve our | management model, updating it monthly with | | | | could affect our relationship | goal of zero incidents with significant environmental impact. | new or revised environmental regulations. | | | | with local stakeholders and | We work to raise awareness in our employees and contractors | We also implemented the regular monitoring | | | | our reputation, reducing the | by providing training to promote operating excellence related | of Environmental Authority inspection processes | | | | social value we generate. | to the environment in which we operate. The potential | to assure compliance with our environmental | | | | | environmental impact of a project is a key consideration when | commitments and action plans. | | | We operate in challenging assessing its viability, and we encourage the integration of environments, including the innovative technology in the project design to mitigate such largely agricultural Choapa impacts. Valley and the Atacama Desert, where water scarcity We prioritise the efficient use of natural resources by using sea is a key issue. water, favouring the use of renewable power, and achieving higher rates of reuse and recovery of water by using thickened Environmental issues directly tailings technology. related to climate change are considered under our specific We recognise that environmental performance is key to our Climate Change principal risk. ability to generate social value and 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, including appropriate financial provisions to ensure physical and chemical stability at their sites once operations have ceased. Antofagasta plc Annual Report 2022 29 Strategic Report / Risk management continued Description Preventive and mitigation measures Highlights | 5. CLIMATE CHANGE | | Risk appetite | Risk level | Outlook | | --- | --- | --- | --- | --- | | The effects of climate change | We recognise that climate change is a threat to human life and | Our Climate Change Strategy seeks to | | | | have had an increasing | the planet as we know it today. | strengthen our capacity to adapt to and mitigate | | | | impact on our operations. | | climate change. This enables us to take early | | | We measure and report our Scope 1 and 2 greenhouse gas The drought in central Chile is action to manage the resulting risks and emissions and have committed to realistic reduction targets. affecting water availability at opportunities in such a way as to mitigate the Los Pelambres, while higher As regards water scarcity, we are reducing our dependence effects of climate change and adapt to new than expected rainfall in the on continental water through more efficient water use and scenarios. northern part of the country the increased use of sea water as a proportion of our total By 2025 we aim to reduce our Scope 1 and 2 is impacting the infrastructure water consumption. As each phase of the Los Pelambres emissions by 30% compared to 2020. We are in the region. In addition, the desalination plant construction is completed, the proportion also committed to achieving carbon neutrality increasing severity of sea of continental water used will decrease, particularly after by 2050, or sooner if technology permits. | swells leads to delays in the | Phase 2 of the project, significantly lowering the potential | | | --- | --- | --- | | delivery of key supply | impact of water scarcity on the Group while freeing up water | Since April 2022, all our mining operations use | | materials and the export | for local communities. | only renewable power, significantly reducing our | | of our concentrates and | | Scope 2 emissions. | We seek constantly to identify risks associated with climate cathodes. change and to implement actions to adapt to and mitigate their The Chilean government’s potential impact. For each risk evaluated as “High” or “Extreme” increased climate ambitions we produce specific action plans and strategies. may result in higher We continue to seek ways to decarbonise our operations and compliance and operating. this requires greater investment in innovative solutions, We are committed to including in developing low-carbon technology, and can contributing to the reduction increase operating costs. of greenhouse gas emissions As part of our regular communication with local stakeholders and water scarcity. We do we discuss the material risks and our controls, action plans and this by increasing the amount related strategies. of power and water we obtain from renewable and sustainable sources. | 6. COMMUNITY RELATIONS | | Risk appetite | Risk level | Outlook | | --- | --- | --- | --- | --- | | Failure to identify and manage | We have a dedicated team that establishes and maintains | We reinforced community programmes related | | | | local concerns and | relations with local communities. These relationships are based | to water for human consumption and irrigation | | | | expectations could negatively | on trust and mutual benefit throughout the mining lifecycle, | to mitigate the impact of the drought in the | | | | impact the Company. | from exploration to final remediation on closure. We seek to | Province of Choapa. | | | | Relations with local | anticipate any potentially negative operating impacts and | | | | We seek to stimulate the generation of economic, communities and minimise these through responsible behaviour. This means social and human capital in the regions where stakeholders affect our acting transparently and ethically, prioritising the safety and we operate by promoting local employment, reputation and impede our health of our employees and contractors, avoiding fostering local suppliers and offering education ability to grow and generate environmental incidents, promoting dialogue, complying with and training opportunities. We run various social value. our commitments to stakeholders and establishing mechanisms programmes to support local entrepreneurs and to prevent or address a crisis. These steps are undertaken in micro and small businesses. the early stages of each project and continue throughout the life of each operation. We have launched a community concerns management system to report any issues caused We contribute to the development of communities in the areas by our operations on neighbouring communities. in which we operate, starting with an assessment, undertaken Concerns can be made confidentially and tracked together with the communities, of the existing situation and to monitor their progress. 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. Antofagasta plc Annual Report 202230 Description Preventive and mitigation measures Highlights | 7. POLITICAL, LEGAL AND REGULATORY | | Risk appetite | Risk level | Outlook | | --- | --- | --- | --- | --- | | Political instability could affect | We constantly monitor political, legal and regulatory | There is currently a heightened level of political | | | | our operations, projects and | developments affecting our operations and projects. | uncertainty in Chile that has been somewhat | | | | exploration activities in the | | reduced by the rejection of the proposed new | | | We comply fully with existing laws, regulations, licences, countries in which we constitution and the advancement of the mining permits and rights in each of the countries in which we operate. Issues regarding the royalty reform. operate. granting of permits, or The Group is supporting the Chilean industry amendments to permits We assess political risk as part of our evaluation of potential associations, particularly the Consejo Minero already granted, and changes projects, including the nature of any foreign investment (Mining Council) in its representations and to the legal environment agreements. responses on the proposed legislation to the or regulations, could also We monitor proposed changes in government policies and government on behalf of the industry. adversely affect our regulations, particularly in Chile, and belong to several operations and development associations that engage with governments on these matters. projects. This helps to improve our internal processes and means that we are prepared to meet any new regulatory requirements. | 8. CORRUPTION | | Risk appetite | Risk level | Outlook | | --- | --- | --- | --- | --- | | Our operations or projects | We have zero tolerance for any activity that would contravene | In 2022 cyber crime was included as a new | | | | around the world could be | anti-bribery and corruption legislation. We maintain a robust | offence in the Chilean anti-bribery and | | | | affected by risks related to | governance regime, open channels of communication, | employment protection laws. The Group’s | | | | corruption or bribery, | Group-wide training programmes, and multiple layers of | controls were updated accordingly. | | | | including operating | controls at all our operations, projects and exploration activities, | | | | The Crime Prevention Model was recertified until disruptions or delays resulting as well as in our third-party relationships using enhanced due mid-2023 by an expert third party. from a refusal to make diligence procedures. “facilitation payments”. Following a compliance risk assessment carried Our Compliance Model is set to prevent actions which may The level of such risks out by external auditors, our risk matrix was involve us directly or indirectly in any potential irregularities depends, in part, on the updated to ensure we have a robust and (including any kind of bribery), detect possible risks in a timely economic or political stability transparent control framework. fashion and respond to any misconduct in an adequate manner. of the country in which During the year, all our employees completed Internal policies, procedures and controls have been we are operating. an online Code of Ethics course as part of our implemented to prevent corruption. preventative measures programme. 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. All our employees receive training on our Crime Prevention Model, which is subject to external certification. We strive to establish a Compliance culture throughout the Group, through extensive training and user-friendly internal communications. Antofagasta plc Annual Report 2022 31 Strategic Report / Risk management continued Description Preventive and mitigation measures Highlights | 9. OPERATIONS | | Risk appetite | Risk level | Outlook | | --- | --- | --- | --- | --- | | Our operations are subject to | Principal risks relating to each operation are identified as part | Lessons learned from previous cases of | | | | a number of circumstances | of the regular risk review processes they undertake. This | community concern has improved the resilience | | | | not wholly within our control. | process also identifies mitigation measures for such risks. | of our operations and minimised the impact of | | | | These include damage to or | | incidents this year. | | | Monthly reports to the Board provide variance analysis of breakdown of equipment or operating and financial performance, allowing potential issues Many years of drought at Los Pelambres has infrastructure, unexpected to be identified in good time and any necessary monitoring or reduced production in 2021 and in 2022. This geological variations, or control activities to be implemented to prevent unplanned climate change impact will be mitigated by the technical issues, any of which downtime. completion of the desalination plant in the first could adversely affect half of 2023. production and/or costs. Our focus is on maximising the availability of equipment and infrastructure and ensuring the effective use of our assets in The Los Pelambres concentrate pipeline incident line with their design capability and technical limits. We keep the was quickly and appropriately mitigated and a variation of processes within defined tolerance limits. project to assess the entire pipeline implemented. 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. | 10. TAILINGS STORAGE | | Risk appetite | Risk level | Outlook | | --- | --- | --- | --- | --- | | Ensuring the stability of our | We manage our TSFs to allow the effectiveness of their design, | The Global Industry Standard on Tailings | | | | tailings storage facilities | operation and closure to be monitored at the highest level of the | Management (GISTM) was published in 2020. | | | | (TSFs) during their entire | Company. All our TSFs are built using the downstream | We are implementing this standard at all our | | | | lifecycle is central to how we | construction method and are designed to withstand | operations. | | | | operate. A failure or collapse | earthquakes and extreme weather. | | | | Our 2021 tailings policy sets out the guiding of any of our TSFs could Catastrophic failures of TSFs are unacceptable. Their potential principles for the management of our TSFs and result in fatalities, damage to for failure is evaluated and addressed throughout the life of any potential or actual impact on the the environment, regulatory each facility. Our TSFs are constantly monitored, and all environment, using sound governance and open violations, reputational relevant information is provided to the authorities, regulating communication with stakeholders. damage and disruption of the bodies and the communities that could be affected. quality of life of neighbouring In accordance with this standard, we continue to communities as well as the We manage our TSFs using data, modelling, and construction update our risk assessment methods, focusing running of our operations. and operating methods validated and recorded by qualified on more detailed risk identification, failure modes technical teams and reviewed by independent international and controls in order to avoid catastrophic experts, whose recommendations we implement to strengthen failures. 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. | 11. STRATEGIC RESOURCES | | Risk appetite | Risk level | Outlook | | --- | --- | --- | --- | --- | | Disruption or restriction of | Contingency plans are in place to address any short-term | During the year, some transport interruptions | | | | the supply of any of our key | disruptions to strategic resources and maintain our security | and the war in Ukraine threatened the supply of | | | | strategic inputs, such as | of supply. We negotiate early with suppliers of key inputs to | some key inputs. However, the impact was | | | | electricity, water, fuel, | ensure continuity. Certain key supplies are purchased from | either prevented or mitigated through constant | | | | sulphuric acid or mining | several sources to mitigate potential disruption arising from | monitoring, contingency planning and actions | | | | equipment, could negatively | exposure to a single supplier. | taken to improve our supply alternatives, such | | | | impact production. | | as inventory management and increase the | | | To achieve cost competitiveness, we endeavour to buy the stockpile capacity. In the longer term, highest possible proportion of our key inputs, such as fuel and restrictions to the availability tyres, on as variable a price basis as possible and to link costs The main exposure during the year was related of key strategic resources to underlying commodity indices where this option exists. to water scarcity at Los Pelambres due to the such as water and electricity drought. By the year end the desalination plant We maintain a rigorous, risk-based supplier management could also affect our growth was 93% complete and will be in production framework to ensure that we engage solely with reputable opportunities. in 2023. 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. Antofagasta plc Annual Report 202232 Description Preventive and mitigation measures Highlights | 12. CYBER SECURITY | | Risk appetite | Risk level | Outlook | | --- | --- | --- | --- | --- | | Breaches in, or failures of, | Our Information Security Management Model provides | We have further strengthened our protective | | | | our information security | defensive structural controls to prevent cyber risks and mitigate | controls and regularly communicate with users | | | | management could adversely | their effects. It employs a set of rules and procedures, including | to prevent cyber attacks. | | | | impact our business activities. | a Disaster Recovery Plan, to restore critical IT functions in the | | | | To reinforce our controls we organised “ethical event of an attack. Malicious interventions phishing” and “ethical hacking” exercises during (hacking) of our information Our systems are regularly audited to identify any potential the year. or operations’ networks could weaknesses or threats to our assets, and specific systems are affect our reputation and/or in place to protect them and our data. operational continuity. 13. LIQUIDITY Risk appetite Risk level Outlook Restrictions in financing Security, liquidity and return are the order of priorities for our We maintained our solid balance sheet and sources available for future treasury investment strategy. We maintain a strong and flexible financing ratios, safeguarding our capability growth could prevent us from balance sheet, consistently returning capital to shareholders to raise debt. taking advantage of growth while leaving sufficient funds to progress our short-, medium- We have focused on diversifying our funding or other opportunities in the and long-term growth plans. This gives us the financial flexibility sources, retaining a high level of interest from market. to take advantage of opportunities as they may arise. financial institutions offering to provide finance We have a risk-averse investment strategy, managing our on competitive terms. liquidity by maintaining adequate cash reserves and financing During 2022 we issued our second $500 million facilities through the periodic review of forecast and actual cash corporate bond and we agreed a Revolving flows. We choose to hold surplus cash in demand or term Credit Facility (RCF) for $500 million, diversifying deposits or highly liquid investments. the sources and term of our debt financing. | 14. COMMODITY PRICES AND EXCHANGE RATES | | Risk appetite | Risk level | Outlook | | --- | --- | --- | --- | --- | | Our results are heavily | We consider exposure to commodity price fluctuations an | The impact of the political uncertainty during | | | | dependent on commodity | integral part of our business and our usual policy is to sell our | the year often outweighed the usual | | | | prices – principally those of | products at prevailing market prices. We monitor commodity | correlation between the US dollar/Chilean | | | | copper and, to a lesser extent, | markets closely to determine the effect of price fluctuations on | peso exchange rate. | | | | gold and molybdenum. | earnings, capital expenditure and cash flows. Very occasionally, | | | | No new hedging positions were entered into The prices of these when we feel it is appropriate, we use derivative instruments during 2022. commodities are influenced to manage our exposure to commodity price fluctuations. by many external factors, We run our business plans under various commodity price including world economic scenarios and develop contingency plans as required. growth, inventory balances, industry supply and demand, As copper exports account for over 50% of Chile’s exports, possible substitution, etc. there is a correlation between the copper price and the US dollar/Chilean peso exchange rate. This natural hedge partly Our sales are mainly mitigates our foreign exchange exposure. However, we monitor denominated in US dollars, the foreign exchange markets and the macroeconomic although some of our variables that affect them and occasionally implement a focused operating costs are in Chilean currency-hedging programme to reduce short-term exposure pesos. Thus any to fluctuations in the US dollar against the Chilean peso. strengthening of the Chilean peso may negatively affect our financial results. Antofagasta plc Annual Report 2022 33 Strategic Report / Risk management continued Description Preventive and mitigation measures Highlights | 15. GROWTH OF MINERAL RESOURCE BASE AND OPPORTUNITIES | | Risk appetite | Risk level | Outlook | | --- | --- | --- | --- | --- | | We need to identify new | Our exploration and investment strategy prioritises | Our exploration activities continued to be focused | | | | mineral resources to ensure | exploration and investment in the Americas. To reduce our | on the Americas and our risk exposure level was | | | | continued future growth. We | risk exposure, we focus on growth opportunities in stable | unchanged. | | | | do this through exploration | and secure countries. | | | | The Company has discovered a significant and acquisition. Our rigorous assessment processes evaluate and determine greenfield copper/gold deposit in the Chilean We may fail to identify the risks associated with all potential business acquisitions High Andes. The initial inferred resource of the attractive acquisition and exploration opportunities, including stress-test scenarios Encierro deposit is 522 million tonnes, with opportunities or select conducted for sensitivity analysis. Each assessment includes a copper grade of 0.65%. inappropriate targets. The a country risk analysis (including corruption) and analysis of Two of Twin Metals’ federal mining leases were long-term commodity price our ability to operate in a new jurisdiction. cancelled during 2022. In August 2022 Twin forecast, and other At the very least, all joint ventures must operate in line with, Metals filed a federal claim challenging these assumptions used when or to the equivalent level of, our policies and technical actions. assessing potential projects standards. and other investment opportunities, will influence Our Business Development Committee reviews potential the forecast return of opportunities and transactions, approving or recommending investments. Incorrect them within authority levels set by the Board. estimates could cause poor decision-making. Regarding exploration, there is a risk that we may not identify sufficient viable mineral resources. | 16. PROJECT DEVELOPMENT AND EXECUTION | | Risk appetite | Risk level | Outlook | | --- | --- | --- | --- | --- | | Failure to effectively manage | We have a project management system to ensure that best | Our projects are developed in accordance with | | | | our development projects or | practices are applied at each phase of a project’s development. | the practices set out in our Asset Delivery | | | | transform our resources into | The project management system provides a common language | System (ADS), including the Functional Quality | | | | reserves could result in | and standards to support the decision-making process by | Assurance Review (FQAR), and are reviewed | | | | delays to the start of | balancing risk with the benefits of growth. In addition, all | by external experts. | | | | production and cost overruns. | geometallurgical models are reviewed by independent experts. | | | | Project risks are proactively managed and Delays on information capture During the project development lifecycle, quality checks for frequently evaluated to minimise their impact and/or not achieving required each of the standards applied are carried out by a panel of on costs. enablers could limit the experts from within the Company. This panel reviews each Project estimates include a contingency conversion of resources into completed feasibility study to assess the technical and provision, calculated using a probability-based reserves. commercial viability of the project. It also assesses how the method that considers the systemic and specific project can be developed safely and considers any relevant risks of each project. risks or opportunities that could potentially impact the schedule, cost or future performance of the project. The risks associated with converting mineral resources to reserves are properly identified Detailed progress reports on current projects are regularly and managed by the teams to ensure accurate reviewed and include assessments of progress against key conversion. 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. Antofagasta plc Annual Report 202234 Description Preventive and mitigation measures Highlights | 17. INNOVATION AND DIGITALISATION | | Risk appetite | Risk level | Outlook | | --- | --- | --- | --- | --- | | Our ability to deliver on our | We seek value-capturing innovations that realise cost savings | During 2022, various automation projects were | | | | strategy and our performance | and/or improve the efficiency, reliability and safety of our | progressed. These included the use of | | | | targets may be undermined | processes while supporting our corporate strategic pillars. | autonomous drills and autonomous trucks at | | | | by missed opportunities or | We evaluate the potential of all ideas using our stage-gate | Centinela and the commissioning of its new | | | | delays in adopting new | approval process and Innovation Board. | Integrated Remote Operations Centre (IROC). | | | | technologies or innovations. | | The IROC for Los Pelambres will be | | | We maintain partnerships with academic institutions and commissioned in 2023. companies specialising in technology and engineering – including peers, when there is no competitive barrier – to Advanced data analytics are used at our maximise the potential for improvements in our processes and operations to increase throughput and ore systems. A dedicated team monitors, identifies and analyses recovery and to improve predictive maintenance. external innovation trends that have potential applications in our During the year our Data Governance business, including those in non-operational areas such as Programme and Data Platform were deployed product sales and purchasing. The team also maintains and across the organisation to improve data access, manages a portfolio of ongoing innovation projects. consistency and quality, thus accelerating our Advanced Analytics capabilities. 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. | 18. EXTERNAL RISKS | | Risk appetite | Risk level | Outlook | | --- | --- | --- | --- | --- | | We must develop the ability | Changes in the global or Chilean economic or political | The controls for this risk were updated to | | | | to manage external threats | environment can impact the Group’s strategy. | incorporate lessons learned during the year, | | | | that are complex to predict | | such as the geographic diversification of our | | | We maintain our good practices and adopt lessons learned and can significantly impact suppliers and actions taken to guarantee the during periods of crisis. the Group’s strategic safety and health of our employees during a objectives and its operational We recognise the volatility of the markets and proactively seek pandemic. continuity. new business models and work to expand our client base. We also increased our stocks of strategic We regularly review our Business Continuity Plan. resources to improve our supply resilience. 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. ### 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 New tax regulations During 2022, each of our mining operations had tax stability agreements Wide-ranging Chilean tax reform is expected during 2023. in place and the future financial impact on them will be assessed if the reforms become law. Geopolitical The potential impact may include lower revenue, longer lead times Global political and economic uncertainty is affecting short-term for critical supplies and increased input costs. demand for copper and other metals, as well as trade flows and our supply chains. The above risks are closely monitored and actively managed to minimise their threat. Antofagasta plc Annual Report 2022 35 Strategic Report / Risk management continued ## Compliance and internal controls We actively promote open communication with all our employees, ### How we achieve our objectives is crucial contractors and local communities. This helps ensure that our corporate ### to the sustainable long-term development and value creation objectives are achieved in an ethical and honest way. ### of the Company. We have zero tolerance for The Compliance Model is reviewed regularly, both internally and by third ### bribery and corruption and are committed parties, and on corruption-related matters it is certified in accordance ### to working with integrity and transparency. with Chilean anti-corruption legislation. ### We comply with all applicable anti-corruption The Model has three pillars: ### and anti-bribery legislation and ensure that Prevention: The main focus of the Compliance Model is to prevent the occurrence of any irregular or illegal situations. We provide a series ### necessary controls are in place to prevent of tools and training opportunities to all employees and contractors ### any unethical behaviour. to support appropriate behaviour through: Areas of focus and development during 2022 • Internal policies and procedures • Whistleblowing investigations, performed by a group of experts, • Anti-trust guidelines were centralised and standardised, guaranteeing independence • The management and update of our Compliance Risk Matrix to the process • Our robust due diligence processes • A robust due diligence process is in place • Anti-corruption clauses in suppliers’ and employees’ contracts • The Company’s Crime Prevention Model was recertified by an • Compliance training and communication independent expert • Access Control and Governance, Risk and Compliance (GRC) • All of the Group’s employees completed online Code of Ethics training tools are used as part of the segregation of duties control during the year • Employees in high-risk areas completed more in-depth training Detection: We have several tools to detect any potentially irregular on ethics and compliance or illegal situations, including: • New employees were trained in the Compliance Model as part • Robust whistleblowing channels of their induction programme • Data analysis • All employees updated their conflict-of-interest disclosures • Anti-corruption internal controls • An “Integrity Week” event was held for all employees during which • Normative Instruments, such as internal policies, procedures the value of respect in the workplace was discussed or guidelines, which are continually reviewed • Anti-corruption events took place at all our operations to reinforce • Internal audit our compliance with our Integrity values Action: If an irregular or illegal situation is detected, it is investigated • The Compliance team was included as part of the approval process according to our internal procedures using fact-based, objective and for social contributions, to strengthen monitoring and governance professional standards. Each of our operations has an Ethics Committee • A communication campaign was carried out as part of our focus which reviews the findings of every investigation and suggests on Prevention in our Compliance Model remediation plans to the Corporate Ethics Committee. The performance • Compliance was included as a topic in the “Antofagasta Supplier Day” of the compliance programme is reported twice a year to the Audit and event, with a particular focus on local suppliers Risk Committee and to the Board. The anonymity of the whistleblowing • Our Compliance Risk Matrix and all the controls related channels is guaranteed to safeguard individuals and so achieve greater to it were reviewed transparency and bolster our non-retaliation policy. • All allegations regarding ethical and non-ethical concerns During the year we received 624 allegations. Of these 245 (39%) were are presented to the Ethics Committee. ethics related and 379 (61%) were non-ethical concerns. The ethical Code of Ethics allegations were classified as: 73% (180) harassment, abuse and Our Code of Ethics sets out our commitment to conducting business mistreatment, 11% (28) fraud or misuse of property, 5% (10) conflicts of in a responsible and sustainable manner. The Code requires honesty, interest, 2% (4) bribery and corruption, 0% (0) modern slavery and 9% integrity and accountability from all employees and contractors and (23) other. Remediation action were defined and implemented for all includes guidelines for identifying and managing potential conflicts substantiated allegations. of interest. It is the core of our Compliance Model and supports the Our Crime Prevention Model ensures compliance with anti-bribery implementation of all other related activities. and anti-corruption laws in the United Kingdom and Chile and is certified Our Code is available on our website. by an external entity. Compliance Model Due diligence highlights Our Compliance Model applies to both our employees and contractors. During the year 6,612 suppliers were reviewed, of which 1.6% were It is clearly defined and is communicated regularly through internal rejected. Of these 97% were Chilean suppliers and 3% were channels as well as being available on our website. All contracts include international. The reasons for rejection were mainly due to high financial clauses relating to ethics, modern slavery and crime prevention or tax risk, non-compliance with Law 20.393 (Criminal Responsibility to ensure contractors’ adherence to our Model. of Legal Entities) or non-compliance with Group guidelines. Antofagasta plc Annual Report 202236 ## Viability statement The stability of tailings storage facilities represents a potentially ### To address the requirements of provision 31 significant operational risk for mining operations globally. The Group’s ### of the 2018 UK Corporate Governance Code, tailings storage facilities are designed to international standards, ### the Directors have assessed the prospects constructed using downstream methods, subject to rigorous monitoring and reporting, and reviewed regularly by an international panel of ### of the Group over a period of five years. independent experts. Given these standards of design, development, Mining is a long-term business and timescales can run into decades. operations and review, the impact of a potential tailings dam failure has The Group maintains Life-of-Mine model covering the full remaining not been included in the sensitivity analysis. mine life for each mining operation. More detailed medium-term planning The above downside sensitivity analyses indicated results which could is completed for a five-year time horizon (as well as very detailed annual be managed in the normal course of business, including the aggregate budgets). Accordingly, five years has been selected as the appropriate impact of a number of the above sensitivities occurring at the same time. period over which to assess the prospects of the Group. The analysis indicated that the Group is expected to remain in When taking account of the impact of the Group’s current position compliance with all of the covenant requirements of its borrowings on this viability assessment, the Directors have considered in particular throughout the review period and retain sufficient liquidity. Based on its financial position, including its significant balance of cash, cash their assessment of the Group’s prospects and viability, the Directors equivalents and liquid investments and the terms and remaining confirm that they have a reasonable expectation that the Group will durations of the borrowing facilities in place. The Group had a strong be able to continue in operation and meet its liabilities as they fall financial position as at 31 December 2022, with combined cash, cash due over the next five years. equivalents and liquid investments of $2,391.2 million. Total borrowings were $3,277.0 million, resulting in a net debt position of $885.8 million. Of the total borrowings, only 13% is repayable within one year, and 17% repayable between one and two years. 35% 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. This analysis has focused on the existing asset base of the Group, without factoring in potential development projects, which is considered appropriate for an assessment of the Group’s ability to manage the impact of a depressed economic environment. The analysis has only included the drawdown of existing committed borrowing facilities, and has not assumed that any new borrowing facilities will be put in place. 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, assessing the standalone impact of each of: • A significant deterioration in the future copper price forecasts by 20% 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 deterioration of 20% in the copper price throughout the review period. • The potential impact of the Group’s most significant individual operational risks. • A shutdown of any one of the Group’s operations for a period of three months. • Potential changes to the Chilean mining royalty, taking into account the Group’s existing tax stability agreements. 37Antofagasta plc Annual Report 2022 Strategic Report ## Stakeholder ## Review | Highlights | 40 | | --- | --- | | Our approach to sustainability | 42 | | How we engage with our stakeholders | 46 | | Our people | 48 | | Safety and occupational health | 51 | | Communities | 54 | | Environment | 57 | | Climate Change | 60 | Task Force on Climate-related | Financial Disclosures (TCFD) | 64 | | --- | --- | | Suppliers | 67 | | Customers | 70 | | Shareholders | 71 | | Governments and regulators | 72 | | Non-financial information statement | 73 | Antofagasta plc Annual Report 202238 ## “Sustainability for Antofagasta plc ## is about deploying a strategy that ## improves the lives of our ## employees, embraces and ## supports the development of our ## surrounding communities, and ## manages the environmental ## aspects of our operations.” René Aguilar Vice President of Corporate Affairs and Sustainability 39Antofagasta plc Annual Report 2022 Strategic Report / Highlights # We have made strong progress against our targets We had record safety performance, and achieved our female participation and emissions reduction goals. ## Sustainability-related governance - In August and December respectively, our Antucoya and Los Pelambres operations were awarded the Copper Mark, the copper industry's responsible production assurance framework. Zaldívar and Centinela received this recognition in 2021. - Our four mining operations completed the independent audits required to validate their performance against the International Council on Mining and Metals' (ICMM) Performance Expectations. - We updated our Human Rights Policy to strengthen our explicit commitment to respect the rights, culture and traditions of indigenous peoples and approved an Indigenous Peoples Engagement Standard. - We prepared a Sustainable Procurement Policy to govern both our management and our expectations of the companies in our supply chain. ## Safety and health - In 2022, there were no fatalities in the Group. - The Group's safety performance continued to improve; compared to 2021, high potential incidents (HPIs) and the Lost Time Injury Frequency Rate fell by 40% to 0.12 and 37% to 0.84, respectively. - The Mining division began installing the latest generation collision avoidance system in its transport equipment, and also in the transport equipment of its contractors and subcontractors. ## People - In 2022, we rolled out our Wellbeing Strategy, focusing on physical, emotional, financial and social welfare. - We increased the proportion of our female employees to 20.4%, compared to 17.2% in 2021, continuing the steady improvement achieved since 2018 and meeting our target for the year. - As our digital transformation plan advanced, we trained employees at Centinela and Los Pelambres to work in our integrated remote operations centres (IROCs) and use autonomous equipment such as trucks and drill rigs. - Our Transport and Mining divisions launched new apprenticeship programmes, accepting 233 candidates, of whom 81% are women, mainly from communities close to our operations. ## Suppliers - In 2022, we began applying ESG criteria to evaluate bids for contracts worth over $10 million. These criteria included the contractors' emissions, D&I, local recruitment and governance strategies and practices. - The number and value of tenders awarded by our Mining division to local suppliers increased by 49% to 7,139 and 10% to $374m respectively as part of our commitment to foster economic development in the regions where we operate. - We signed Greenhouse Gas Agreements with mining equipment suppliers Komatsu and Caterpillar in a step towards developing zero-emission vehicles and machinery, which currently account for approximately two-thirds of our Scope 1 emissions. - In December, we launched our Suppliers for a Better Future programme, which sets targets for suppliers on environmental, social and governance (ESG) matters, to be achieved by 2025. ## Community - In March, we launched a new community grievances management system to report concerns, complaints or grievances caused by our operations. - We dedicated extra resources to measuring the impact of our investments in our areas of influence, as we continue to evaluate our programmes and improve our performance. - In 2022, we ramped up our En Red (Connected) digital connectivity programme, comprising over 20 initiatives to address the deficit of digital infrastructure and skills in the rural and vulnerable communities near our operations. - In September, as part of our efforts to combat the acute drought in the Choapa Province, we launched a 30-month project to digitalise and automate the 80 Rural Sanitary Services (SSRs) that provide water to people's homes. ## Environment - In 2022, we updated our Biodiversity Standard as part of the implementation of our Climate Change Strategy, improving its alignment with the position statement from the International Council on Mining and Metals (ICMM) on Mining and Protected Areas. - We continued to implement the Global Industry Standard on Tailings Management at Los Pelambres and at Centinela and Zaldívar, aiming to finish by the prescribed deadlines of August 2023 and August 2025. - Los Pelambres is planting some 48,000 native trees and shrubs across 300 hectares at the Quillayes tailings dam. This will help control particulate material events while blending the dam in with its surrounding environment. ## Climate change - We approved new Water and Energy Policies to improve our management of these critical resources in the fight against climate change and aligned our Energy Management System with Chile's new Energy Efficiency Law. - We completed the conversion of all the electricity supply of our mining sites to renewable contracts, leading to a reduction of 873,695 tCO₂e in our Scope 2 emissions compared to 2021. - We continued to refine our calculation of Scope 3 emissions with the aim of setting a reduction target in 2023 or as soon as possible thereafter. We also began applying an internal carbon price on tenders for carbon-intensive products and in the evaluation of projects. - In October, our Transport division signed an agreement to acquire a 100% green hydrogen-fuelled cargo train that should start operating in 2024. - During 2022, we began work on a decarbonisation plan for all our operations. 40 Antofagasta plc Annual Report 2022 ### DELIVERING SUSTAINABLE ECONOMIC VALUE At Antofagasta, our purpose is to develop mining for a better future and we understand that generating economic value means more than making a profit. 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. This direct distribution of economic value generates indirect benefits through spending by employees, suppliers, the government and others, benefitting the country as a whole. For Antofagasta, creating economic value means generating profits responsibly and with long-term vision, incorporating unique and innovative solutions in business decisions to address challenges in the regions in which we operate, as well as working to tackle today’s global challenges. In 2022, we directly distributed a total of $7,445 million. Suppliers ## $4,620m Payments for the purchase of utilities, goods and services Communities ## $57m Social investment programmes Lenders ## $77m Interest payments ## $7,445m Shareholders ### Total economic contribution ## $1,263m Dividends Subsidiaries’ non-controlling shareholders ## $80m Dividends Employees ## $548m Salaries, wages and incentives Governments ## $800m Income taxes, royalties and other payments to governments Antofagasta plc Annual Report 2022 41 Strategic Report / Our approach to sustainability ## We are committed to making a positive ## long-term impact on society In 2022, our CEO Iván Arriagada was named chair of both Chile’s Mining ### Sustainability is a core part of our values and Council and the London-based International Council on Mining and ### is at the heart of our decision-making as we Metals (ICMM), thanks in part to our efforts on sustainability. He is the ### seek to achieve our purpose of developing first Latin American to lead the ICMM, a global association which seeks to improve the industry’s sustainable development performance. In ### mining for a better future. addition, he was named as the 2022 recipient of the prestigious Copper Governance Club’s Ankh Award for Copper Man of the Year in recognition of his At Antofagasta, our commitment to making a positive long-term impact outstanding service to the copper mining industry, leadership, and for on society is underpinned by our values and robust policies, standards promoting the benefits of copper and its critical role in shaping a more and strategies that we constantly review and adapt in order to address sustainable future. emerging and growing societal concerns. Using this framework, we strive to engage the whole organisation in our commitment to respect human rights, promote safety and health, deliver ### RESPONSIBLE PRODUCTION FRAMEWORK strong economic returns, protect the environment, address climate In recent years, an important focus of our work has been to align change and create social value in the regions where we operate. our policies, strategies and practices with the highest sustainability Our Sustainability Policy and our Human Rights Policy establish the standards and to address transparency and trust issues through principles that guide our day-to-day actions on environmental, social and third-party validations in order to demonstrate that we produce governance (ESG) matters. In 2022, we updated our Human Rights copper responsibly. Policy to reinforce our commitment to the rights of indigenous people In 2021, Centinela and Zaldívar were among the first mining sites in and to formally align our security practices with the Voluntary Principles the world to be awarded the Copper Mark, an independent external on Security and Human Rights (VPSHR). We also prepared assurance of mining sites’ compliance with strict and internationally a Sustainable Procurement Policy that governs our management recognised standards of sustainable production. In 2022, Antucoya and expectations of companies in our supply chain. and Los Pelambres completed the same assurance process, also We regard climate change as one of the greatest challenges of our obtaining the Copper Mark. Summaries of the full Copper Mark times. In 2022, we approved specific Energy and Water Policies to reports are available on coppermark.org. strengthen our Climate Change Strategy across the organisation, while The Copper Mark was launched in 2020 and was inspired by the further embedding climate considerations into our working practices. UN’s Sustainable Development Goals (SDGs). It involves the We also updated our Biodiversity Standard. independent verification of activities at copper-producing sites, The Board is responsible for leading and monitoring sustainability based on 32 criteria in five categories: governance, labour rights, practices. The Sustainability and Stakeholder Management Committee environment, community and human rights. Sites must at least makes recommendations to ensure ESG issues are included in the partially meet all criteria and commit to closing all identified gaps Board’s deliberations. At the executive level, sustainability considerations within 12 months. As participants, we are committed to a guide decision-making across the organisation, with particular third-party review every three years. responsibility falling upon the Corporate Affairs and Sustainability area. As members of the International Council on Mining and Metals, our In 2022, a sustainability reporting team was established to further four mining sites also underwent independent audits on compliance improve transparency and provide more detail about our interactions with the ICMM’s Performance Expectations. The ICMM has with stakeholders. assessed the equivalency of its 38 Performance Expectations In July, we published our first special Tax Report detailing our tax against the Copper Mark and the process focused on those not payments in 2021, one of a series of recent initiatives to improve covered (six) or only partially covered (nine) by the Copper Mark. transparency about our business. In August, we published an ESG This assurance process ensures that ICMM’s 27 member Databook on the Antofagasta plc website for the first time, which shows companies are held to the same high standards and will be sustainability data by site and by year since 2018. Towards the end of repeated every three years. the year, we began preparing our second special report, this time on Further information can be found in the Mining division’s 2022 climate change and social investment, to be published in April 2023. Sustainability Report. We communicate with and train the whole organisation to ensure that everyone is aligned with our commitment to sustainability. Sustainability targets associated with safety, diversity and inclusion (D&I), environment and social performance account for 25% of annual performance bonuses, to encourage internal buy-in and focus our employees’ efforts on best practice. Antofagasta plc Annual Report 202242 Materiality analysis • Prioritising and defining material topics: The European Financial In 2022, we conducted a materiality assessment to identify the Reporting Advisory Group’s scales were used to define each topic’s sustainability issues most critical to our business and stakeholders which level of materiality. The most significant impacts were grouped we update every two years. It was built collaboratively with inputs from into material topics under the categories economic, governance, internal and external stakeholders. For the first time we used the new environmental and social. Each topic was reviewed and confirmed Global Reporting Initiative Standard on Material Topics, which came into or adjusted by Antofagasta’s sustainability team. effect on 1 January 2023. In total, 28 material topics were identified, of which four are new: The analysis has four stages: industrial protection, wellbeing, cyber security and, in the case of our Transport division, soil remediation. The most significant issues • Diagnosing the organisation’s context: Comprehensive review in terms of their importance to stakeholders and their potential impact of internal and external information, and interviews with senior are: corporate governance; regulations and permitting; transparency, management and external experts regarding existing, new and communication and trust; safety and health culture; communities and emerging ESG topics for the copper mining industry, both in Chile indigenous peoples’ engagement; and social contribution and skills and internationally. development. • Identifying actual and potential material topics: The information obtained was used to draw up a preliminary long list of actual, The exercise ensures that we report on subjects of interest to potential and positive and negative material topics. stakeholders in our Mining and Transport divisions’ Sustainability Reports and will guide our focus, strategies, policies and practices in 2023. • Assessing the significance of the impacts: The qualitative and quantitative impacts of each topic were evaluated based on the Details of our approach and activities to address these challenges in severity and likelihood of actual and potential impacts. The severity 2022 are contained in the corresponding sections of this Stakeholder assessment was based on the scale, scope and remediable nature Review or in our 2022 Sustainability Reports. of the impacts. ### Antofagasta plc materiality matrix • Decarbonisation • Corporate governance • Workforce wellbeing • New regulations, regulatory uncertainty and permits • Transparency, communications and trust • Safety and health culture HIGH • Dialogue and engagement with community and indigenous peoples • Social contribution and skills development • Circular economy • Responsible sourcing • Economic performance • Respect for human • Contractors’ management • Site security rights • Innovation • Management of the operations • Digital transformation social and environmental impacts • Risk management and climate change adaptation • Water management • Collaborative labour relations MEDIUM HIGH • Talent attraction, retention and development IMPORTANCE TO STAKEHOLDERS • Local employment • Diversity, equity, inclusion • Tailings management • Biodiversity • Cyber security MEDIUM LOW • Soil remediation • Heritage and urban LOW development LOW MEDIUM LOW MEDIUM HIGH HIGH STRATEGIC IMPORTANCE FOR THE GROUP Antofagasta plc Annual Report 2022 43 Strategic Report / Our approach to sustainability continued ## Our commitment to the ## Sustainable Development Goals At Antofagasta, we are committed to playing our part in achieving ### The Sustainable Development Goals (SDGs) the SDGs through the creation of value for our different stakeholders ### were adopted by all United Nations Member and the approval of commitments, targets and programmes that ### States in 2015 as a universal call to end seek to contribute to the sustainable development of the regions where we operate. ### poverty, protect the planet and ensure that all ### people enjoy peace and prosperity by 2030. NO POVERTY End poverty in all its forms everywhere We contribute to the reduction of poverty through the distribution of the economic value generated, such as wages and taxes, and our social programmes. Since 2020, we have required contractor companies to pay their employees an ethical minimum monthly wage. In 2022, it was set at Ch$552,000, 38% higher than Chile’s legal minimum wage of Ch$400,000. GOOD HEALTH AND WELLBEING Ensure healthy lives and promote wellbeing for all at all ages For Antofagasta, the safety and health of our employees, contractors and nearby communities is non-negotiable and takes precedence over results. The aim of our Safety and Health Strategy is to have no fatal accidents or occupational health illnesses. In 2022, we rolled out a Wellbeing Strategy focusing on physical, emotional, financial and social welfare to complement our existing Flexitime and Work-Life Balance Guidelines that aim to enhance employees’ work experience and life quality. QUALITY EDUCATION Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all We support inclusive access to good quality education in order to improve job opportunities in the regions where we operate. Initiatives range from providing school and higher education scholarships to providing and strengthening technical-professional courses. We offer Young Graduate programmes as well as apprenticeships and internships to give learning and work opportunities to local young people. GENDER EQUALITY Achieve gender equality and empower all women and girls The Group’s Diversity and Inclusion Strategy seeks to increase the participation and retention of women. This is reflected in our recruitment and selection strategies, in the promotion of inclusive workspaces and in our zero-tolerance policy on sexual harassment. The proportion of women in our direct workforce has grown steadily, from 8.6% in 2018 to over 20% by the end of 2022. CLEAN WATER AND SANITATION Ensure access to water and sanitation for all Our water management practices, which are aligned with the International Council on Mining and Metals’ (ICMM) Water Stewardship Framework, aim to protect water for our operations, communities and the environment. Our strategy aims to reduce our use of continental water. We anticipate that by 2025 raw or desalinated sea water and recirculated water will account for 90% of usage at our mining operations. We also work with local communities to ensure water availability for human consumption and irrigation. AFFORDABLE AND CLEAN ENERGY Ensure access to affordable, reliable, sustainable and modern energy Since April 2022, our four mining operations’ electricity comes solely from renewable contracts, in line with our Climate Change Strategy, and we are piloting technology to replace the diesel used in our mining equipment. Our Transport division ordered a green hydrogen fuelled cargo train that will begin operations in 2024. We also funded solar panels for 40 homes in Michilla to provide backup against frequent outages. DECENT WORK AND ECONOMIC GROWTH Promote inclusive and sustainable economic growth, employment and decent work for all We are governed by the UK Modern Slavery Act. Our Code of Ethics, Human Rights Policy and Diversity and Inclusion Strategy aim to ensure a harassment-free, inclusive workplace that respects human rights and diversity. We promote employee development and in 2022 spent $2.3 million on training initiatives. We work with our suppliers to support environmental, social and governance best practice in the supply chain. INDUSTRY, INNOVATION AND INFRASTRUCTURE Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation Innovation is one of the five pillars of our Strategy to develop mining for a better future, fostered through our Innovaminerals open platform and pitch days for suppliers at our operations. As part of our Digital Transformation programme, we are training employees on digital technology and the use of autonomous equipment and integrated remote operating centres. Our En Red programme aims to bring digital infrastructure and skills to local communities. REDUCED INEQUALITIES Reduce inequality within and among countries We aim to reduce inequality by providing help in the form of scholarships, educational support and access to Young Graduate programmes to promote social mobility in remote and vulnerable sectors in the regions where we operate. In 2022, we provided 951 scholarships to students in the Antofagasta Region and the Choapa Province. We also promote skills development and job opportunities for local people and businesses. Antofagasta plc Annual Report 202244 SUSTAINABLE CITIES AND COMMUNITIES Make cities inclusive, safe, resilient and sustainable Through our Social Management Model, we choose, develop and implement social investment projects together with local communities, strengthening local leadership and the long-term impact of initiatives. We work with local authorities, communities and third-party experts to improve public spaces and social cohesion in communities. Our Transport division plans to rehabilitate 48 hectares of industrial land in the centre of the city of Antofagasta as part of a broader urban development plan. RESPONSIBLE CONSUMPTION AND PRODUCTION Ensure sustainable consumption and production patterns Our Sustainability Policy drives the responsible management of the Group’s activities. Each of our four mining operations has been awarded the Copper Mark, the copper industry’s new responsible production assurance framework, and completed the ICMM’s Performance Expectations third-party validation process. Our Suppliers for a Better Future programme aims to improve suppliers’ ESG practices through training, targets and incentives in tender evaluations. CLIMATE ACTION Take urgent action to combat climate change and its impacts We recognise climate change as one of the greatest challenges facing the world today and acknowledge that we are part of the solution. As a copper producer we supply an input that is critical for low-carbon technologies. At the same time, we are working to decarbonise our operations. Our Climate Change Strategy sets ambitious goals for emissions and water use, as well as the resilience of our operations and their areas of influence. We are committed to being carbon neutral by 2050 at the latest and this year we achieved our target to cut our Scope 1 and 2 emissions by 30%. LIFE BELOW WATER Conserve and sustainably use the oceans, seas and marine resources Our Biodiversity Standard is aligned with the ICMM’s position statement on Mining and Protected Areas. It aims to prevent or minimise our impact on biodiversity, to restore or provide appropriate compensation for any impacts and to generate additional benefits for the areas in which we operate. Centinela and Los Pelambres monitor the marine environment in the vicinity of their port facilities, studying 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. LIFE ON LAND Sustainably manage forests, combat desertification, halt and reverse land degradation and halt biodiversity loss Protecting biodiversity is a key part of our climate change strategy. We seek to promote net gains in biodiversity and for nature-based solutions to capture CO 2 and help the adaptation to physical risks. We implement programmes to protect animal, bird and plant species and we administer near 27,000 hectares of nature sanctuaries and protected areas in the Choapa Province, equivalent to seven times that used by Los Pelambres and its related installations. PEACE, JUSTICE AND STRONG INSTITUTIONS Promote peaceful and inclusive societies Antofagasta’s activities conform to the UK’s Bribery Act and Modern Slavery Act as well as Chilean Law No 20.393 on bribery and asset laundering. Our Code of Ethics, Compliance Model and Crime Prevention Manual define how we undertake our business in a responsible, accountable, honest and transparent manner and we conduct annual training for our teams with higher exposure to risk on these matters. We also work with suppliers to improve their governance models. PARTNERSHIPS FOR THE GOALS Strengthen the means of implementation and revitalise the global partnership for sustainable development We promote the creation of public-private alliances, benefitting from our partners’ experience and strategies to contribute to the achievement of the SDGs in the regions where we operate. Our partners include the state, Chilean and international trade associations, other mining companies and/or industry groups, civil society, academic institutions and NGOs. In particular we use alliances, mostly with local or national foundations, to implement our social programmes which, in many cases, leverage or complement government programmes. For more information on these initiatives, see the Safety and Health, People, Communities, Suppliers, Climate Change and Environment sections of this Stakeholder review. Antofagasta plc Annual Report 2022 45 Strategic Report / How we engage with our stakeholders ## We have constructive ## long-term relationships ## with all stakeholders ### This is key to delivering our purpose. ### Our engagement with stakeholders is open, ### transparent and collaborative, to support the ### long-term success of our business. We use ### appropriate mechanisms to interact with ### them, provide them with information ### and learn about their interests ### and concerns. | OUR PEOPLE | COMMUNITIES | SUPPLIERS | | --- | --- | --- | | Approximately 31,000 employees | We operate in Chile’s Antofagasta and | We work with on average over 1,700 | | and contractors work at our operations, | Coquimbo Regions where our neighbours | suppliers, of which 91% are based in Chile. | | projects, exploration programmes and | include a range of communities around our | They provide a broad range of products | | corporate offices. They are almost all | mines and transport business as well as on | and services, from large mining equipment | | based in Chile. | the coast near our port and desalination | to catering and transport. | facilities. Why we engage Why we engage Why we engage Constructive relationships, anchored in mutual The wellbeing of local communities is directly Suppliers play a critical role in our ability to respect and transparency, are crucial for related to the sustainable development and operate sustainably and safely. Through our a good working environment and talent success of our business. Through a bottom-up engagement with them we seek to improve retention as well as for productivity and approach to engagement, we seek to grow their sustainability performance and ensure efficiency. Contractors are essential for together with these communities and they meet our sustainability standards and operational continuity and, through our contribute to their long-term social and guidelines. We also work with suppliers to engagement, we seek to transfer knowledge economic development, while taking care ensure that their solutions are cost-effective and ensure compliance with our own to prevent, mitigate and compensate for any and efficient. standards, particularly on safety and health. adverse impact our activities may have. How we engage How we engage How we engage We regularly engage with our workforce We engage with communities through different The procurement team regularly meets with through a variety of channels including site social programmes, often implemented in suppliers to discuss upcoming tenders, our visits by senior management, on-site reviews, alliance with local organisations. Initiatives sustainability requirements and other matters. surveys of the working environment and are selected and designed jointly with the Tenders take place through an online platform, individual performance evaluations. We also community, using working groups on specific designed to guarantee fairness and offer technical training, provide career areas of community development or concerns. transparency. To ensure the broadest possible opportunities and foster a culture of access to tenders, we use an automated knowledge. We meet regularly with union invitation system and several different external representatives and the managers of our platforms. By prioritising local suppliers, contractors to discuss a range of topics, we seek to foster the development including environmental, social and of neighbouring communities. governance. See P48-50 See P54-56 See P67-69 for more information for more information for more information Antofagasta plc Annual Report 202246 | S.172(1) STATEMENT | • The need to foster the Company’s business | | --- | --- | | Antofagasta’s purpose is to develop mining for | relationships with suppliers, customers | | a better future – to achieve this and continue | and others | | to deliver sustainably, we rely on the support | • The impact of the Company’s operations | | of a range of different stakeholders. This | on the community and the environment | means always putting the safety of our people • The desirability of the Company maintaining first as we seek to deliver value to our a reputation for high standards of business customers, suppliers, shareholders and the conduct, and communities in which we operate. • The need to act fairly as between members The Directors of Antofagasta plc have acted in of the Company accordance with their duties to operate in the Section 172 considerations are embedded in way that they consider, in good faith, is most decision-making at Board level and throughout likely to promote the success of the Company the Group. In the Strategic Report we outline for the benefit of its members as a whole, how we engage with our stakeholders to particularly with regard to the stakeholders create value at our operations. Within the and matters set out in section 172(1) of the Corporate Governance Report we discuss key Companies Act 2006, including among decisions that the Board has taken in the year, other matters: and how stakeholders interests were • The likely consequences of any decision considered and how we engaged with them. in the long term See P114-115 • The interests of the Company’s employees for more information ### CUSTOMERS SHAREHOLDERS GOVERNMENTS AND ### We sell principally to industrial customers, Shareholders are the companies, financial REGULATORS who further process our copper institutions and individuals that hold a stake Governments and regulators, at national, concentrate and cathodes. in the Company. They are entitled regional and local levels, draft, implement to receive dividends and to vote and uphold legislation, rules and at shareholder meetings, including the regulations, setting the framework within election of the Company’s directors. which we operate. Why we engage Why we engage Why we engage Most sales are made under long-term Shareholders, and particularly institutional Mining is a long-term business and framework agreements or annual contracts, investors, are constantly evaluating their timescales can run into decades. Political with sales volumes agreed for the following holdings in the Company and require regular cycles are typically far shorter and material year. Without these long-term customer information about its strategy, projects and developments and changes to policy, relationships, we would have to sell a larger performance. We therefore pay special legislation or regulations can have a major proportion of our cathodes and concentrate attention to our communications with them, impact on our business. on the spot market through traders, with maintaining fluent and transparent dialogue greater uncertainty about pricing and volume. to ensure that they are all treated fairly and receive all relevant information. | How we engage | How we engage | How we engage | | --- | --- | --- | | We hold regular meetings with customers | We regularly meet with institutional investors | We work alongside mining associations and | | around the world. Some of our major | and brokers’ analysts at industry conferences | other industry-related bodies to engage with | | customers are also equity holders in our | and on roadshows, as well as at one-on-one | governments on public policy, laws, | | mining operations. The Chairman and several | meetings to discuss both business and ESG | regulations and procedures that may affect | | Directors visit Japan each year to meet some | matters. The Board attends the Company’s | our business. We interact with governments | | of our partners and we have a marketing | Annual General Meeting, either physically or | and regulators strictly within their engagement | | office in Shanghai. | virtually, and its members are available to | mechanisms. In Chile, these are clearly defined | | | answer questions. The Company also provides | in Law N° 20.730 on lobbying. | regular production and financial reports and other ad hoc information. See P70 See P71 See P72 for more information for more information for more information Antofagasta plc Annual Report 2022 47 Strategic Report / How we engage with our stakeholders continued ## Our people The Group’s People strategy is built around the four pillars of culture, ### An inclusive culture that fosters organisational effectiveness, labour relations and talent management, ### wellbeing is key to attracting and and is aligned with the charter of values which is central to our ### retaining a diversity of talent. organisation. It seeks to promote an inclusive, innovative, motivated and effective workforce with access to meaningful training and career development opportunities. Wellbeing At Antofagasta, we believe employee wellbeing is vital to the effectiveness and sustainability of our organisation and improving employees’ labour experience is a key focus of our work. In 2021, we implemented our New Ways of Working project, which introduced a permanent hybrid system of remote and in-person working in response to employees’ preferences. During the year, we finished updating our Work-Life Balance Guidelines, tailored for each mining site and designed to improve the balance of employees’ time between work, family and recreational activities. The guidelines were launched in 2019 and provide benefits that exceed the requirements of Chilean legislation, such as being able to have a year off work for health or other reasons. Our corporate offices offer employees a flexitime system to fit working hours around their individual needs. ## 23% ## 31,126 Employees People ## 20% Women employees ## 77% Contractors ## 77% Unionised employees Antofagasta plc Annual Report 202248 We also rolled out our Wellbeing Strategy, which focuses on our Gender balance employees’ physical, emotional, financial and social welfare. The strategy In 2022, we increased the proportion of our female employees to builds on the tools we developed to help employees deal with increased 20.4%, compared to 17.2% in 2021, meeting our goal for the year. stress levels during the COVID-19 pandemic lockdowns and it aims This continues our steady improvement since 2018, when we set to promote healthy habits and closer ties among colleagues and with a target to double women’s participation by the end of 2022, compared wider society. to a baseline of 8.6% in 2017. We met that target a year early in 2021, and have now set a new gender diversity goal for women to represent As part of the strategy, we promoted our 24-hour helpline and 30% of employees by 2025. By comparison, women comprise 15.2% encouraged in-person meetings and activities, allowing new recruits of the mining industry workforce in Chile. to meet fellow workers and strengthen interpersonal relations and 1 teamwork. The initiative encourages healthy habits and preventive health Women as a percentage of employees checks, and offers financial education to improve employees’ Year 2018 2019 2020 2021 2022 understanding of subjects such as health insurance. Total number The social pillar particularly seeks to foster a collaborative and of employees 6,481 6,663 6,760 7,081 7,494 supportive workplace through the Volunteering Programme, now in its Women 8.8% 10.4% 14.7% 17.2% 20.4% second year. Employees at each mining operation and the corporate 1. As at year end offices are encouraged to brainstorm, select and take part in a volunteer | project in the local community. A total of 70 employees took part in our | Female representation in management | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | first volunteering programme, which ended in April 2022, benefitting | | | Directly reports | | | | | | 261 people. | | Executive | to the Executive | | | Senior | | | | | Committee | | Committee | Management | | 1 | | Diversity and Inclusion | Male 9 82% 57 80% 19 86% | | | | | | | | Our Diversity and Inclusion (D&I) Strategy, launched in 2018, has | Female 2 18% 14 20% 3 14% | | | | | | | transitioned from an awareness-raising phase about unconscious bias 1. Includes directors of subsidiaries as defined in The Companies Act 2006 (Strategic and discrimination to inclusive practices becoming an integral part Report and Directors’ Report) Regulations 2013 of how we work. We use many different ways to attract, select and retain women in the In 2022, we renewed our network of more than 80 D&I champions, workforce. For example, if a woman is on the shortlist for a position who act as agents of change to create an inclusive organisational and a male candidate is selected, the decision must be justified. We have culture that supports the retention of women and people with disabilities strong alliances with universities, aiming to encourage women studying or different cultural origins. In a key initiative, we ran a campaign on science, technology, engineering and maths (STEM) subjects to join the respectful behaviours and held workshops on respectful environments. Group and increase female participation in STEM subjects through our Other activities included webinars on Chile’s same-sex marriage and scholarship programmes. gender equality laws and, using a protocol approved in 2021, supporting Our apprenticeship programmes provide an important entry route for any employees in the process of gender transition. women from local communities to obtain technical qualifications and, in most cases, lead to a highly prized permanent job. In 2022, our Transport division and mining operations selected 233 new apprentices, of whom 81% were women, mainly from communities close to our operations. People with disabilities In 2022, people with disabilities accounted for 1.3% of our employees, above the level required by Chile’s Workplace Inclusion Law. We continued to lead the Mining Council’s technical working group on universal access for people with disabilities to mine sites and a regulation on the topic was updated during the year. Antofagasta plc Annual Report 2022 49 Strategic Report / How we engage with our stakeholders *continued* ### Building human capital At Antofagasta, we seek to develop our employees as well as potential candidates in the local communities where we focus our recruitment efforts. In 2022, 72% of our employees lived in the Antofagasta and Coquimbo Regions where our operations are located. We invested $2.3 million in training in 2022, providing an average of 45 hours of training per employee. ### Leadership skills We trained shift leaders, providing information and tools to improve their leadership skills, to learn about labour law and to think more flexibly. Their positions are pivotal operational roles, overseeing up to 100 people, and by the end of the year, 65% of them had participated in the programme. As part of our D&I strategy, a total of 70 women from executive, supervisor and operator positions continued with career development and leadership programmes during the year. In November, we began a new programme to strengthen the leadership skills of 30 deputy managers and superintendents in line with our Leadership Competencies Model. ### Digital transformation More than 40 operators and supervisors were retrained to operate Centinela's Integrated Remote Operations Centre (IROC), which went live in December 2021, and the Los Pelambres IROC, where a small group began working in August 2022. Employees at these mining operations also received training on the use of autonomous equipment such as drill rigs and, in the case of Centinela, a fleet of trucks at the new Esperanza Sur pit. In 2022, 673 employees took courses on data-based decision-making and basic digital literacy as part of our Digital Academy, which aims to develop the skills necessary for our Digital Transformation programme. ### Developing new talent In 2022, Los Pelambres and Antucoya ran Relevos (Relief Workers) programmes, training local people unable to work full shifts due to family or other reasons to drive mine haulage trucks to cover lunch breaks. We also run graduate programmes to provide a talent pool for executive positions. In 2022, we expanded the criteria and the number of places to give opportunities to young people in the Choapa Province. Similarly, we offer openings for local technical school pupils and university students to do internships or professional work placements at our operations. ### Labour relations At Antofagasta, we recognise employees' rights to union membership and collective bargaining. In total, 77% of our employees are represented by 16 unions: 11 in the Mining division and five in the Transport division. In 2022, we successfully negotiated four three-year labour agreements in a climate of respect and without disruptions. Agreements were reached with the supervisors' unions at Los Pelambres and Zaldívar, and the supervisors' and operators' unions at Antucoya. Chilean legislation protects freedom of association. It also prohibits forced and child labour, sets a minimum wage, limits working hours, and enforces a minimum of 15 days of annual paid leave. Our employees and contractors can make complaints or raise issues on our confidential Tu Voz (Your Voice) reporting line. The contact details are available on our website as well as directly at the operations. We have reinforced our contractors' awareness of this whistleblowing channel. In 2022, our Mining division conducted an Engagement and Perception Survey at Los Pelambres, Centinela and Zaldívar to assess employee satisfaction, thus completing a process that started in 2021 at Antucoya and our corporate offices. In total 91% of employees responded, expressing high levels of satisfaction with the organisation's safety and health and D&I strategies. Action plans have been developed to address gaps, such as the need for more collaborative environments. ### Contractors Contractors represent 77% of our workforce and are crucial to operational continuity. In 2022, we required contractors to pay their employees an ethical gross monthly minimum wage, 38% 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 contractor workers' children. In 2022, the human resources area began an audit of contractors' compliance with minimum and legal labour standards, including meeting Antofagasta's ethical minimum wage. The process will be completed in 2023. ![blue arrow icon]() See P67-69 in Suppliers for more information 50 Antofagasta plc Annual Report 2022 ## Safety and ## occupational health ### The safety and health of our employees, ## contractors and nearby communities are 35% ### non-negotiable and our number one priority. fewer High Potential Incidents than in 2021 We continuously seek to improve our performance in this area, with a particular focus on the early identification of risks and the permanent elimination of fatalities and occupational illnesses at all our operations. Strategy Our Safety and Occupational Health Strategy is based on four pillars: safety and occupational health risk management; reporting, investigating and learning from our accidents; leadership; and contractor management. The robust management of safety and occupational health underlies all our activities, through which we are committed to continuous improvement, controlling risks and monitoring performance. We seek to be recognised as a leading Company in safety and occupational health whose employees and contractors promote and maintain a safe and healthy work environment. Safety performance In 2022, there were no fatalities in the Group. We continued to reduce the number of High Potential Incidents (HPIs), recording 35% less than in 2021, due to improvements at our Mining and Transport divisions. We focus on HPIs as leading indicators of the effectiveness of safety controls to continuously strengthen critical controls. HPI targets are included as a key performance indicator in employees’ Performance Agreements to promote and reinforce a preventive and resilient safety culture. Antofagasta plc Annual Report 2022 51 Strategic Report / How we engage with our stakeholders *continued* We seek to keep our Group Lost Time Injury Frequency Rate (LTIFR) below a score of 1. In 2022, the Mining division achieved 0.76, 32% better than 2021, while the overall Group scored 0.84, a 37% improvement. This was due to strengthened Control Strategies for high-risk tasks (see “Critical Controls” section below). ### Safety risk management #### Critical controls 20 July 2021 marked one year since the death of contractor worker Fernando Silva López at Los Pelambres. As a mark of respect, safety-related reflection breaks were held at all our operations to reinforce the lessons learned. Following the detailed analysis of that tragic incident, we focused on improving our planning, analysis and supervision of critical tasks. We implemented programmes for supervisors to better understand their roles and responsibilities with regard to planning, shift changes, work crews and their obligation to confirm that tasks are executed according to plan, particularly high-risk and critical ones. We also defined and deployed the task risk analysis system, Planned Task Risk Assessment (PTRA), to plan high-risk and critical tasks. This tool has been designed to ensure supervisors and crews are always planning and executing safe working practices of routine and non routine high risk tasks. The PTRA, ensures the key tools and equipment, standard and critical controls are always present and describes the step by step standardised working practice. The PTRA system emphasises a preventative culture, including operational continuity without fatal accidents, the reduction of occupational illness and the minimising of workers’ exposure to high-risk situations. It also emphasises self-care. If at any point workers perceive that adequate working conditions, as outlined in the PTRA, are not being met, they should employ the “Yo Digo No” (I Say No) tool and stop working until the proper conditions can be verified. There are now 13 critical activities addressed by the PTRA in the Safety and Occupational Health’s digital library. In 2022, the Mining division began to install the latest generation collision avoidance system in its transport equipment, as well as in that of its contractors and subcontractors. Full implementation is expected by the first quarter of 2023, with the system alerting the driver of the vehicle or equipment when it detects imminent danger. #### Visible leadership Leadership is a key driver for improving safety performance and the Executive Committee conducts regular on-site safety and health reviews to engage with employees and contractors. Action plans are followed by every site on each of four key areas: safety culture, safety management systems and processes, available safety tools and contractor management. In 2022, we focused on in-field controls. Supervision of occupational health is embedded within the operating model and throughout the whole system of controls. #### Investigations Investigation teams independent of the area involved in the incident, often involving representatives from other sites, look into all HPI incidents. Findings are shared across the entire organisation and used to close any identified risk management gaps. In 2022, we investigated deviations to critical controls and implemented corrective measures, building on previous campaigns to raise awareness on the use of control strategies and understanding of how critical controls are verified. This focus will continue into 2023 to ensure that corrective measures are taken every time a *Yo Digo No* is activated. ### Occupational health risk management Antofagasta is committed to providing a healthy workplace and contributing to the physical and mental wellbeing of everyone who works for us. In 2022, we continued to improve the application of critical controls for health risks and high potential health events and registered an occupational illness frequency rate of 2.09 per million hours worked. During the pandemic, our efforts to control the spread of COVID-19 allowed us to maintain operational continuity while protecting the health of our workers. Once COVID was contained, we were able to reassign resources to implement a Surveillance Programme to protect our workforce against other health risks. In cases of early detection of hearing loss, for example, corrective action is taken and the worker is removed from the risk, with job reassignment to prevent further decline. Additionally, as a continuous improvement initiative, we study the origin of the risk and implement mitigation measures to prevent other workers from exposure. #### Psychosocial risks In 2022, we launched our Control Strategy for psychosocial risks, which increased during the COVID-19 pandemic. Thanks to this strategy, we identified five employees with temporary mental health issues and provided treatment for them to prevent the illness from becoming a chronic condition. We have a confidential 24x7 helpline for employees and contractors seeking help for mental health issues. #### Threats to security In 2022, there were seven cases of copper theft from our Transport division’s trains and trucks, three more than in 2021. There has been an increase in the violence used in the robberies, which are now more confrontational, with the use of weapons and threats that put our employees’ physical and psychological safety at risk. As a result, our Transport division has strengthened measures to protect its personnel, equipment and cargo. A senior industrial protection expert has developed a preventative strategy, involving local authorities and the police, to address the new security situation. The division also takes part in a new intersectoral industrial safety working group that has been established to focus on these challenges. It is important to note the role that the government has played in working together with the industry to address this issue. #### Contractor management Our contractors and subcontractors are included in our safety and health performance data and must fully comply with our standards and procedures. In 2022, we placed special emphasis on the effectiveness of our Special Corporate Health and Safety Regulation for Contractor and Subcontractor Companies (RECSS), continuing to embed this updated contractor management manual across the organisation to ensure an adequate understanding of our requirements and supervision of contractor tasks. 52 Antofagasta plc Annual Report 2022 # Safety Indicators # Number of fatalities | | 2022 | 2021 | 2020 | 2019 | 2018 | | --- | --- | --- | --- | --- | --- | | Chilean mining industry | N/A^{4} | N/A^{4} | 13 | 14 | 16 | | Mining division | 0 | 1 | 0 | 0 | 1 | | Transport division | 0 | 0 | 0 | 0 | 0 | | Group | 0 | 1 | 0 | 0 | 1 | # Lost Time Injury Frequency Rate (LTIFR)$^{1}$ | Chilean mining industry | N/A^{4} | N/A^{4} | 1.41 | 1.54 | 1.65 | | --- | --- | --- | --- | --- | --- | | Mining division | 0.76 | 1.12 | 0.73 | 0.75 | 1.10 | | Transport division | 2.15 | 4.60 | 2.37 | 4.03 | 6.66 | | Group | 0.84 | 1.34 | 0.86 | 1.01 | 1.59 | # Total Recordable Injury Frequency Rate (TRIFR)$^{2}$ | Mining division | 0.37 | 0.46 | 0.55 | 0.54 | | | --- | --- | --- | --- | --- | --- | | Transport division | 1.00 | 1.45 | 1.51 | 1.71 | | | Group | 0.41 | 0.52 | 0.63 | 0.63 | | # Occupational Illness Frequency Rate (OIFR)$^{3}$ | Mining division | 2.26 | 0.18 | 0.00 | 0.29 | 0.39 | | --- | --- | --- | --- | --- | --- | | Transport division | 1.40 | 0.00 | 0.00 | 1.30 | 0.34 | | Group | 2.09 | 0.14 | 0.00 | 0.52 | 0.38 | 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 200,000 hours worked. 3. Number of occupational illnesses during the year per million hours worked. Amended method of calculation. All prior years adjusted for consistency. Our OIFR increased significantly in 2022 as we identified those whose medical conditions had changed or had developed occupational illnesses during the two years of the pandemic that was not adequately treated. 4. Not available. ![img-1.jpeg](img-1.jpeg) Antofagasta plc Annual Report 2022 53 Strategic Report / How we engage with our stakeholders continued ## Communities At Antofagasta, we aim to contribute to social value creation in the ### We seek to foster economic and social regions where we operate through education and training initiatives, ### development in local communities through job creation and social investment that addresses the needs of local ### proactive engagement and investment, communities. A commitment to respect human rights underlines our interactions. ### and in collaboration with local people, ### organisations and authorities. Social management model Our Social Management Model is designed to ensure that our engagement principles, methodologies and practices are applied consistently across our operations. It has four components: Engagement, Initiative Management, Impact Measurement and Socio-Territorial Alert Management, each with a corresponding standard. Impact measurement In 2022, in partnership with external impact advisers, we dedicated extra resources to measuring the impact of our investments in our areas of influence, as we strive to evaluate our programmes and improve their performance. ## $57.4 m Economic Social Investment in 2022 54 Antofagasta plc Annual Report 2022 ## “We launched a LinkedIn Learning platform to teach digital skills to 60 students, entrepreneurs and suppliers in our areas of influence.” We measured the impact of six programmes, two in the Antofagasta Region and four in the Choapa Province, using the Change Theory and Social Return on Investment (SROI) tools. In addition, we measured the process to initiate the Caimanes Development Fund. All showed a positive SROI, indicating that they create social value. The Adolfo Ibañez University updated its Territorial Human Wellbeing Matrix, measuring the impact of Los Pelambres’ social investment initiatives in the Choapa Province. The study measured 22 indicators, such as access to green areas, sports, education and health services, and found that 75 of the initiatives improved urban and rural living conditions by providing better access to services and reaching more recipients. In 2023, we expect to complete a study that maps all our social investment projects against the UN Sustainable Development Goals. For further information, see our 2022 Sustainability Report. ### Grievance mechanism In March, we launched a new community grievance mechanism to report concerns, complaints or grievances caused by our operations in neighbouring communities. Grievances can be expressed confidentially and tracked on the community grievance channel to monitor progress on their resolution. There is a 30-day deadline to answer grievances, except in unusually complex cases. ### Indigenous Peoples In 2022, we updated our Human Rights Policy to strengthen our explicit recognition and commitment to respect indigenous peoples’ rights, culture and traditions and we approved an Indigenous Peoples Engagement Standard. Relations with indigenous peoples are aligned with local legislation, ILO Convention 169 and the guidelines of the International Council on Mining and Metals (ICMM). ### 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. In 2022, following the Somos Choapa model, we increased our social investment budget to cover new agreements with communities in the Choapa Province to address specific operational incidents (see page 58 Environment) and the 2022 Sustainability Report. | | 2022 | | --- | --- | | Mining division | $56.8m | | Transport division | $0.6m | | **Total social investment** | **$57.4m** | ### Digital transformation In 2022, we ramped up our En Red-Digital Community programme, comprising more than 20 initiatives to address the deficit of digital infrastructure and skills in rural and underprivileged communities near our operations. One of the year’s highlights was the installation of fibre-optic cables to the Caimanes and Limahuida communities in Choapa, allowing over 500 families the opportunity to connect to the internet. Both communities also received digital literacy training from partners in the programme. ![img-2.jpeg](img-2.jpeg) In September, in alliance with La Serena University, we launched a 30-month project to digitalise the 80 Rural Sanitary Services (SSRs) that provide water to homes in the Choapa Province. The initiative involves designing a telemetry and big data system to automate and optimise water management, enabling the integrated management of the water basin in this drought-stricken area. The local volunteers who run the SSRs will be trained to use the technology. Similarly, in October we opened a pharmacy in María Elena in the Antofagasta Region, in alliance with the pharmacy startup Fracción and the municipality. It serves as a distribution centre for the surrounding area and allows locals to buy low-cost medicine in person or online, without travelling long distances to the nearest cities. The aim is to follow up with a telemedicine centre, an initiative we are also developing for Chillepín’s primary health centre in Choapa. En Red is underpinned by a focus on digital literacy and in 2022 we launched a LinkedIn Learning platform to teach digital skills to 60 scholarship students, entrepreneurs and suppliers in our areas of influence. Likewise, 80 small businesses in the tourism sector in Choapa benefited from a pilot programme to use platforms such as booking.com to grow their business. ### Combatting drought In 2022, we stepped up efforts to ensure continuous water availability for human consumption and irrigation in the drought stricken Choapa Province, through our Aproxima and Confluye programmes. Among other measures, we took advantage of heavier than usual snowfall to fund the construction of two artificial ponds to capture snowmelt in the Spring and relined 54.9 km of irrigation canals to reduce water losses (see En Red programme above). ### Economic development Centinela’s “new way of operating” plan seeks to reduce contractors’ use of mine camps and to house them in the near-by town of Sierra Gorda. This builds on the success of our Safe Return Plan that allowed the town’s hospitality sector to reopen after the COVID-19 pandemic. Almost 50 hostels have met the required safety standards, enabling up to 1,000 contractor employees to stay in Sierra Gorda, significantly boosting the local services sector. Antofagasta plc Annual Report 2022 55 Strategic Report / How we engage with our stakeholders continued ## 160+ young people from Choapa were offered apprenticeships in 2022 In the Choapa Province, we run various programmes to support local entrepreneurs, micro and small businesses, and farmers. Among 2022’s highlights was the Integral Support for Agriculture (AIA) programme, which awarded 360 grants to farmers in the Salamanca area to increase yields and improve irrigation. In addition, the Cosecha initiative provided training and funding to boost the competitiveness of 129 small farmers, craftworkers and tourism entrepreneurs in Salamanca and Canela districts. Cultural heritage Our Transport division owns some of the city of Antofagasta’s most In the Antofagasta Region, these efforts form part of the Antofagasta historic buildings and is keen to preserve the city’s cultural heritage, Mining Cluster Corporation, a public-private initiative that seeks to support local tourism and improve the city’s life quality. In 2022, as part stimulate the region’s economic development and through which we have of these efforts, the disused railway station Estación Valdivia was committed to building human capital and developing innovative suppliers. declared a national heritage site and the adjoining railyard a “typical area” by the National Heritage Council and we are working with the Under this framework, we provided over 800 scholarships for local council and community on a restoration plan. school and university students in 2022, among other education initiatives. We also began planning the conversion of a nine-hectare railyard, the administration offices and the former colonial homes of the division’s We also work with local suppliers to enhance their capabilities and executives into a heritage neighbourhood area, with green spaces and opportunities to provide us with goods and services (see page 67-69 a pedestrian walkway. The project forms part of a broader plan to Suppliers). Likewise, we encourage national and international suppliers vacate all the division’s railyards in the city and prepare them for urban to post jobs on the new regional job portal in order to boost local development. employment. In the Choapa Province, we awarded 887 scholarships to young people Building local skills undertaking technical or university studies in 2022, almost twice as We seek to stimulate the generation of economic, social and human many as those given in 2021. Work also continued with Education 2020, capital in the regions where we operate by promoting local employment, an NGO, to support 18 schools to implement project-based learning supporting local suppliers and offering education and training techniques, benefitting 192 teachers and 2,158 pupils. We also support opportunities. In 2022, 72% of our employees were from the the province’s five technical-professional schools to strengthen links Antofagasta and Coquimbo Regions, where our operations are based. with local companies and higher education centres. The apprenticeship programmes offered by our Transport division and Los Pelambres’ employment programme has trained 2,885 people four mining operations are a key vehicle for this commitment. In 2022, from Choapa since 2015, mainly in mining trades but also in the services over 230 young people from these regions, mainly women, were sector and in self-employment. The programme has a jobs’ portal for accepted as apprentice engine drivers, maintenance workers and truck contractor companies to post vacancies and, in 2022, 48% of their drivers, or in plant, tailings and port roles. Most apprentices will be employees came from the province. offered permanent jobs at the end of the programme. In 2022, we opened places on our young graduates’ programme to Antucoya and Los Pelambres also initiated Relevos (Relief Workers), university leavers from Choapa Province. Two were accepted onto a programme under which people who live near the operations are Antofagasta’s corporate programme in December 2022 and eight trained to drive mine trucks to cover breaks during shifts. It is aimed took on roles at Los Pelambres in January 2023. at people who cannot work a full shift, frequently for family reasons. In another example, 35 technical secondary school pupils did their internships at Antucoya under the Eleva programme, a public-private partnership that seeks to improve technical training and young people’s job prospects. Antofagasta plc Annual Report 202256 ## Environment ### At Antofagasta, we recognise that we have ## a responsibility towards our stakeholders 48,000 ### and the environment in which we operate. native trees being planted ### We believe it is possible to mine sustainably by Los Pelambres ### by prioritising environmental protection ### and the efficient use of natural resources. Our Environmental Management Model covers leadership, operational events reporting, operating risk management and regulatory risk management. It seeks to prevent, control and mitigate the impacts we may have on the environment and, if there is an impact, to compensate for it appropriately. In 2022, we focused on regulatory risk, reviewing environmental requirements and auditing our operations. We report our environmental performance monthly to the Executive Committee and twice a year to the Board’s Sustainability and Stakeholder Management Committee. The Internal Audit area performed environmental audits on all our operations in 2022. These were to verify their state of compliance with environmental requirements and the measures committed to by our operations within the framework of their environmental permits. No significant negative findings were reported. Environmental compliance In Chile, large-scale projects are subject to strict environmental and social impact assessments by the Environmental Evaluation Service (SEA), in order to obtain a Resolution of Environmental Approval (RCA). These RCAs include legally binding commitments on matters related to the prevention and mitigation of the project’s impact on the environment and any necessary compensation measures. Compliance with commitments is verified by the Superintendency for the Environment (SMA). Antofagasta plc Annual Report 2022 57 Strategic Report / How we engage with our stakeholders continued Antofagasta has a total of 77 RCAs, which include over 10,000 commitments on matters such as water use, air quality, biodiversity and the projects' construction, operation and closure. In 2022, the Group obtained no new RCAs. The SEA is currently reviewing the Environmental Impact Assessment (EIA) for the second phase of the Los Pelambres Expansion project, which includes doubling the capacity of the desalination plant near Los Vitos to 800 l/s, and the installation of a new concentrate transportation system, which will avoid populated areas. In 2022, the Transport division received all the permits and completed engineering studies to allow it to remediate 48 hectares of soil in its railyard in the city of Antofagasta. Work is scheduled to start in the second half of 2023 and is an important step in the division's plans to move its operations out of the city centre. # Reporting on operational events with environmental consequences Operational events with environmental consequences are classified as Actual (high, medium or low) or Potential (high or low) if they could have caused an incident. Actual high or medium severity incidents are investigated by a committee established specifically for this purpose. Under the criteria established in the environmental assessment of each operation or project, 29 events with no severe environmental consequences were reported to the SMA. Of those events, two were high-profile operational incidents: - On 31 May, a leak was detected from the Los Pelambres concentrate pipeline in the Limpo sector in the Salamanca municipal district. A thorough review detected no material environmental impact and the pipeline resumed operations on 26 June after approval from the relevant local regulator. - On 15 August, unusually high sea swells overturned a construction platform at the marine works of Los Pelambres' desalination plant project, and marine works were temporarily halted pending the recovery of lost equipment and materials from the seabed. Since the event, to date the SMA-accredited laboratory has found no trace of contamination. The marine works resumed on 4 October and are expected to be completed in the first half of 2023. # Responsible production Sustainability practices at our four mining operations have been assured by the Copper Mark, a global standard which demonstrates that the operation produces copper according to the best international sustainability standards – in 2021 at Centinela and Zaldivar, and in 2022 at Antucoya and Los Pelambres. Under the Copper Mark, operations commit to renew the assurance process every three years. In 2022, we also submitted updated information to renew our registration with LMEpassport, the sustainability credentials register of the London Metal Exchange (LME), including an executive summary of the Copper Mark, which is recognised by the LME. As members of the International Council on Mining and Metals (ICMM), our four mining sites underwent independent audits on their compliance with the ICMM's Mining Principles Performance Expectations. The ICMM has assessed the equivalency of its 38 Performance Expectations against the Copper Mark and, therefore, the process focused on those not covered (six) or only partially covered (nine) by the Copper Mark. All our sites complied with the Performance Expectations. The assurance process ensures that ICMM's 27 member companies are being held to the same high standards and will be repeated every three years. ![img-3.jpeg](img-3.jpeg) # Tailings Our mining operations have three main tailings storage facilities (TSFs): Los Pelambres' conventional tailings dams at El Mauro and Los Quillayes (no longer in regular use) and a thickened tailings deposit at Centinela. Zaldivar has a small TSF as it produces a small amount of concentrates. We have an Independent Tailings Review Board for the three main TSFs and their stability and compliance were once again confirmed under international criteria in 2022. During 2022, we continued with our implementation of the Global Industry Standard on Tailings Management (GISTM) and are on schedule to complete it at Los Pelambres by August 2023 at Centinela by December 2023 and Zaldivar by August 2025. We are strengthening our governance of TSF management and are also reinforcing our social and environmental controls to comply with the standard's main focus of zero environmental and social damage. Consistent with the GISTM's focus on transparency, El Mauro continued to serve as a pilot for Programa Tranque (Tailings Programme), a public-private initiative managed by Fundación Chile, a Santiago-based technology transfer institute, to develop an online system for monitoring a TSF's physical and chemical stability, with an end-goal of applying this monitoring to all TSFs in Chile. The pilot is scheduled for completion in 2023. We have also improved production rates and compaction of sand in the El Mauro TSF wall. In 2021, rates were approximately 300,000 tonnes per month and, in 2022, this was raised to 450,000 tonnes, further increasing the TSF's stability. At Centinela's TSF, we began increasing the height of the raise, with completion expected during the first half of 2024. We also improved the stability of the tailings thickening process, where the percentage of solids sent to the TSF remained above 66%. Each percentage point of solids represents a saving of some 30–40 l/s of water. In 2022, we completed the feasibility studies for an innovative project to store tailings in abandoned mine pits at Centinela, which would complement the operation's thickened tailings deposit. The Declaration of Environmental Impact (DIA) was approved in 2021 and further engineering studies are underway. In-pit storage has safety and environmental advantages compared to conventional TSFs and would extend the life of Centinela's current TSF. 58 Antofagasta plc Annual Report 2022 Air quality ### All our operations have robust programmes to control dust emissions SMART ROAD INITIATIVE (PM10 and 2.5). They are monitored constantly, in some cases with In 2022, Centinela piloted an initiative to reduce dust levels at the the participation of the local community. In addition, air quality data is Esperanza Sur pit, leading to a 30% reduction in particulate matter regularly reported to the regional authorities. emissions and better management of water resources. Levels of In 2022 there were no incidents of dust visibility or expressions of particulate matter are monitored online using dust control devices concern from communities near Los Pelambres regarding dust from the installed on haulage trucks and a centralised system identifies mine itself or the El Mauro TSF. Coupled with more favourable climatic where the most critical areas are and assigns tanker trucks to conditions, this was the result of a series of additional voluntary controls irrigate them. implemented at the TSF. These measures have been verified on site by a committee representing the neighbouring Caimanes community. Circular economy At the mine, an interdisciplinary working group examined the We have approved our new Circular Economy Strategy which will be phenomenon of climate change (including drought and wind pattern implemented in 2023. The Strategy has three pillars: reduction in the intensification) to produce hard data with which to review existing use of resources, expanding the lifecycle of material and equipment, and measures and consider others that could be implemented, and to adjust conversion of waste into new resources. For the Procurement area, this our preventive model accordingly. will involve issues such as packaging, pallets and the logistics of goods At the Quillayes TSF, Los Pelambres is planting 48,000 native trees and transportation, as well as the potential reuse of products such as tyres shrubs on the 300 hectares site, of which 120 hectares have been and steel. planted so far. The vegetation requires little irrigation, easily adapts to Mine closure extreme environments and serves to control particulate material events As required under Chilean law, all our operations have closure plans while blending the dam with its surroundings. approved by the Chilean government’s National Geology and Mining Biodiversity Service (SERNAGEOMIN). In addition, we have our own more Our Sustainability Policy provides the framework to position biodiversity demanding Integrated Mine Closure Standard. In 2022, we updated this stewardship throughout the mining cycle. standard to incorporate guidelines from our Biodiversity and Climate Change Standards as well as our Tailings Policy, all of which are aligned In 2022, we updated our Biodiversity Standard as part of the with the ICMM’s Integrated Mine Closure–Good Practice Guide. implementation of our Climate Change Strategy and to improve its alignment with the position statement from the ICMM on Mining and In 2022, SERNAGEOMIN approved Antucoya’s five-year update of its Protected Areas. Under this standard, we seek to promote the closure plan and the update of Centinela’s closure plan, which generation of net gains in biodiversity. This includes avoiding and incorporates new facilities installed at the operation. minimising our impact on biodiversity and mitigating and compensating for any impact that does occur to ensure a net zero loss of biodiversity. In addition to managing four nature sanctuaries and other extensive protected areas, our activities encompass protecting species and outreach and research initiatives. Antofagasta plc Annual Report 2022 59 Strategic Report / How we engage with our stakeholders continued ## Climate change ### Our Climate Change Strategy sets ambitious Climate change scenario analysis In 2022, Antofagasta enhanced its understanding of the financial impact ### goals not only for emissions and water use, of the physical risks of climate change by considering a ‘middle of the | but also to build the resilience of our | | 1 | | --- | --- | --- | | | road’ climate change scenario analysis known as SSP2-4.5. | This | | operations and their areas of influence. | scenario takes advantage of the latest generation climate models | | (CMIP-6) and is considered an intermediate scenario where emissions As a Group, we recognise climate change as one of the world’s greatest peak in around 2040 and then decline, leading to warming by 2100 of challenges and acknowledge that we are part of the solution. As a 2.5 to 3°C compared to pre-industrial temperatures. This scenario aligns copper producer, we supply an input that is critical for low-carbon with the path implied by current policies that are in place. technologies and, at the same time, we are working to decarbonise our operations, putting climate change at the heart of how we manage To better understand how physical climate changes could impact our our business. business, we have focused on particular climate change vectors such as higher temperatures, water stress, extreme rainfall events, conditions Our Climate Change Strategy is central to our overall Group Strategy. that generate particulate matter, storm surges and wave events. It sets the framework to co-ordinate and realise synergies among the Each of our operations analysed the potential effect of these factors Group’s many initiatives to mitigate and adapt to a changing climate, on their production, cost performance, and the cost of adaptation according to its five pillars: development of resilience to climate change, measures and control options. reduction of greenhouse gas emissions, efficient use of strategic resources, management of the environment and biodiversity, and To understand the financial impact of transition risks, we continue integration of stakeholders. For each pillar, different areas of action to use the International Energy Agency’s Sustainable Development have been identified, accompanied by a plan of short-medium-and Scenario (IEA’s SDS), an ambitious and widely recognised scenario long-term measures. that provides a global view and context on a low-carbon transition. In the IEA’s SDS, fossil fuel prices decline due to low demand and The Board of Directors has ultimate responsibility for the Group’s lower costs are offset by the introduction of carbon taxes to encourage climate-related objectives and strategy, integrating a deeper awareness the low-carbon transition. In alignment with this scenario, we have of climate change into our decision-making processes. It has recognised quantified the financial impact of the introduction of a carbon tax, climate change as one of the principal risks facing the Group and defined including an analysis of core measures to decarbonise our mining its risk appetite accordingly. In its oversight of climate-related matters, operations and identifying cost efficient opportunities. the Board is assisted by its Sustainability and Stakeholder Management Committee, Audit and Risk Committee and Remuneration and Talent To align the potential impact of both physical and transition risks to the Management Committee. A corporate Climate Change Committee, lifetime and planning cycle of our mining operations, we defined short formed in 2021, advises the Environment team and meets fortnightly term as 0–5 years, medium term as 5–15 years and long term as to review advances and consider issues that may be adopted for 15–50 years. future implementation, such as nature-based solutions. Once the risks and opportunities were identified the most material risks Carbon emissions are linked to a proportion of our executives’ and opportunities were screened and quantified at an operational level, long- and short-term performance incentives, as well as to the their financial impact was estimated using assumptions from these annual performance incentive for employees (see pages 156 and 158). scenarios. We also assessed the financial impact of climate change across the lifetime of each mine and for a 25-year period for the In 2019, we committed to implementing the recommendations of the Transport division see page 66. Task Force on Climate-related Financial Disclosures (TCFD), and disclosed against these recommendations for the first time in our 2021 Climate scenario analysis was used to better understand and assess the Annual Report. likelihood and impact of risks and opportunities and was integrated into our risk assessment processes using ISO 31000 and best practice Our metrics and targets are aligned with the TCFD’s seven cross- methodology (Bow Tie which considers cause, consequences and industry climate-related metric categories, including for GHG emissions controls). The estimated financial impact on operating costs and capital and internal carbon prices. We also report in our Climate Scenario expenditure was calculated against three views: 1) no mitigation or Analysis the potential financial impact of the transition and physical risks adaptation, 2) controls already in place, and 3) plans and actions (see page 66), and our investment related to mitigation and adaptation, implemented in the future. In 2023 we plan to improve our climate which includes the construction of a desalination plant at Los Pelambres. change risk management by determining the levels at which particular We are also considering how to reflect the benefits that come from climate risks would trigger us taking preventative actions. copper’s use in applications, such as renewable power and electric vehicles, that make a significant contribution to reducing global GHG emissions, and which are also expected to be reflected in an increase in the copper price. However, the correlation between decarbonisation and the copper price is difficult to model. 1. A Shared Socioeconomic Pathway scenario used by the Intergovernmental Panel on Climate Change (IPCC) in its 2021 Sixth Assessment Report. Antofagasta plc Annual Report 202260 Greenhouse gas emissions and climate metrics At Antofagasta, we recognise our responsibility for upstream and ## 42% downstream emissions and have proactively adopted measures to mitigate the carbon footprint of our operations. We achieved our first reduction in Scope 1 and 2 emissions since 2020 Scope 1 and 2 emissions reduction target set in 2018 two years early in 2020. We use our Scope 1 and 2 emissions profile and emissions intensity In 2021, we set more ambitious targets: to reduce our Scope 1 and 2 (tCO 2 e /tCu) to monitor our exposure to our most material transition emissions by 30% by 2025 compared to the 2020 baseline, equivalent risks related to power supply and diesel consumption. We also track and to a reduction of 730,000 tCO 2 e, and to achieve carbon neutrality by monitor several other environmental indicators, the most important of 2050 or earlier, technology permitting. However, since April 2022 all which is measuring our water withdrawal. This helps us manage water our electricity contracts have been for renewable energy, reducing our security risks at our operations and in our local communities, and drives Scope 2 emissions to almost zero and allowing us to achieve our 30% us to reduce our reliance on continental sources. reduction commitment three years earlier than anticipated. During 2023, we will establish a new medium-term emission reduction goal for 2030. In 2022, we began working on a decarbonisation plan for all our operations, defining the baselines, the truck replacement plan, energy input projections and the assumptions for current and future technologies. The final plan will set out the steps needed to achieve carbon neutrality by 2050. 1, 2 | Operational CO | 2 e emissions (tCO | | 2 e) | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | Corporate Offices | | | | Transport | | | | | | | (Santiago and | | Mining | division | | | | Los Pelambres Centinela Zaldívar Antucoya | | | | London) | division | (FCAB) Total | Scope 1 Direct emissions 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 3, 4 Scope 2 Indirect emissions 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) 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 CO2e emissions 5 tCO 2 e/t 2022 1.25 2.14 1.44 2.59 – 1.75 12.91 – 2021 1.58 3.63 1.78 3.69 – 2.56 13.67 – 2020 1.65 4.19 1.79 3.44 – 2.79 13.93 – 1. Tonnes of carbon dioxide equivalent. 2. Further information on our CO 2 e emissions can be found on the Carbon Disclosure Project website (www.cdp.net). 3. All Scope 2 figures have been independently verified. 4. Scope 2 figures for 2020 and 2021 have been restated applying the market-based method of reporting acording to the GHG Protocol. This method reports Scope 2 emissions specific to each individual operation and is considered by the Company to be a more accurate method of reporting. Under the previously used method, average emission factors for the whole of Chile were used. Emissions using both methods of reporting are included in our Sustainability Report. 5. Tonnes of CO 2 equivalent per tonne of copper produced or per tonne transported in the case of the Transport division. Antofagasta plc Annual Report 2022 61 Strategic Report / How we engage with our stakeholders *continued* ### Energy supply In 2022, we implemented our new Energy Policy, recognising energy as a strategic resource whose management must ensure a safe, economic, efficient and sustainable supply for our operations. We are committed to implementing, maintaining, operating and continuously improving our Energy Management System to incorporate technological innovation and clean energy to reduce GHG emissions. During the year, we completed our alignment of the system, which is based on the ISO 50001:2018 energy management standard, to the requirements of Chile's Energy Efficiency Law. Our conversion of all electricity supply to our mining sites to renewable contracts was led by Zaldivar in 2020. It was followed by Antucoya and Centinela in January 2022 and Los Pelambres in April 2022, leading to a reduction of 873.695 tCO$_{2}$e in our Scope 2 emissions in 2022 compared to 2021. At the end of 2022 a renewable energy supplier informed Los Pelambres of an issue at its hydroelectric generation facility that would temporarily prevent it from supplying energy from the facility. The supplier is continuing to provide energy from other sources, including third parties, but these may not always be renewable. As a result, Scope 2 emissions from Los Pelambres may increase in 2023. ### Mine haulage and transport In 2022, approximately two-thirds of our Scope 1 emissions were attributable to diesel combustion in our mine haulage trucks. We are positioning ourselves to be early adopters of technology, including electric-powered and hydrogen-fuelled machinery, that will drastically reduce these emissions or possibly eliminate them altogether. In 2022, Antofagasta participated in pilot projects to develop electric-powered haulage trucks at Antucoya and electric-powered trolleys to assist haulage trucks at Los Pelambres. Pilot tests were also undertaken on electric buses and pickup trucks for the transport of employees at Los Pelambres. In addition, Antofagasta is a sponsor of Charge On, an international open innovation challenge for suppliers to develop solutions to safely, sustainably and quickly recharge battery-powered mining trucks. As part of Hydra, a consortium that includes French utility Engie and Australian technology think tank Mining 3, we tested a prototype hydrogen fuel cell and battery propulsion system designed to simulate the operation of a hydrogen-fuelled mine haulage truck. The testing took place at Centinela, the first time at a Chilean mine, to see how this fuel would perform at high altitudes and under extreme temperatures. It showed that altitude, low temperatures and low humidity all affect performance and these factors will be considered when developing this technology. In October 2022, our Transport division agreed to purchase a 100% hydrogen-fuelled cargo train locomotive, the first in Chile. It is expected to start operating in 2024 and, if successful, the division plans to convert its existing fleet to hydrogen. ### Scope 3 emissions Besides our focus on Scope 1 and 2 emissions, we have worked over the last two years to improve our understanding of our Scope 3 emissions. These are indirect emissions related to our activities but generated by upstream (suppliers) and downstream processes that we do not control or own. These represent about 75% of the Group's carbon footprint. In 2022, we made a preliminary calculation of our 2021 Scope 3 emissions, which indicated that nearly 60% were from purchased goods and services. This calculation is being refined and in 2023 we expect to report our 2022 Scope 3 emissions. We expect to set a reduction target as soon as possible. An important challenge faced by the mining industry globally is to define a consistent methodology to calculate Scope 3 emissions. In this context, we are working with ICMM member companies to develop a guide to measure and report the industry's Scope 3 emissions with a view to having a common standard to define our own reduction goals. While all Scope 3 action depends on the combined efforts of producers, suppliers and customers, some commodities face greater technological and collaborative barriers than others. We will work to overcome these barriers, mainly through collaborative partnerships across the value chain. ### ESG in the supply chain Antofagasta requires improved sustainability practices from suppliers as a key part of its purpose to develop mining for a better future. This will gradually bring suppliers into line with our own internal standards on environmental, social and governance (ESG) matters. Our priority is that suppliers reduce their GHG emissions in line with our Climate Change Strategy, but we are also focused on their governance, local hiring and diversity and inclusion practices. ESG criteria are used to evaluate bids for contracts worth over $10 million, complementing the energy efficiency and safety criteria we already apply. In the environmental area, we also now favour companies with robust emission reduction strategies and targets. The GHG emission calculations included in bids are checked by applying an internal carbon price, thus assigning a cost to the emissions for the first time. Internally, we use the carbon price in capital allocation decisions and growth project evaluation, as well as incorporating it into our financial planning cycles. 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. See P68 in Suppliers for more information 62 Antofagasta plc Annual Report 2022 ## Water management Water management and efficiency have long been at the forefront of our Mining division's concerns. Three of our four mining operations are located in the Atacama Desert and the fourth, Los Pelambres, is in an area that has been suffering a severe drought for the past 13 years, which, according to various climate scenarios, is expected to continue. Consistent with these concerns, our Climate Change Strategy supports our operations' reduced dependence on continental water sources through improved water use efficiency and the increased use of sea water. With the completion of the Los Pelambres desalination plant in 2023, the proportion of continental water used will decrease even further. Our total water withdrawal in 2022 was 73 Gigalitres of which 45.4% was sea water. Total water withdrawal increased by 5.4% as precipitation tripled in 2022 from the low levels in 2021, and Centinela Concentrates and Antucoya achieved record annual throughput. In 2022, we approved a new Water Policy to have a water position statement as a Group and launched a Water Management Standard in August. The Policy recognises water as a strategic resource and as an essential element for life on our planet. We are committed to safeguarding the availability of water resources for our operations, communities and the environment, under practices aligned with the ICMM's Water Management Framework. We will also progressively reduce water withdrawal, seek multiple alternative sources of supply and implement innovative technological solutions to improve water efficiency and recirculation. These alternatives include Centinela's complete cessation of water extraction # 45% ## of water withdrawals were sea water from wells in December 2022 and the expected reduction of continental water extraction by 50% when Phase 2 of the desalination plant at Los Pelambres is complete. Phase 1 (400l/s) of the Los Pelambres desalination plant will be completed in 2023 and an expansion to 800 l/s is expected to be completed in 2026, subject to permitting. This will allow Los Pelambres to stop using water from the Choapa River for operational purposes. Zaldívar extracts continental water from wells located some 100 km from the mine. These withdrawal permits will expire in 2025, and we are looking to extend them and move to alternative water sources towards the end of the decade as part of the plans to extend the operation's life. Antofagasta has been a pioneer of the use of sea water in the Chilean mining industry since the 1990s. In 2022, sea water accounted for 45.4% of our Mining division's water withdrawal, led by Antucoya (97%) and Centinela (87%). In 2022, water reuse rates at our mining operations ranged from 79% at Los Pelambres to 94% at Zaldívar. Our target is for sea water and reused or recycled water to supply more than 90% of the division's operational water withdrawal by 2025. ## Operational water$^{1}$ withdrawals by source, 2019-22, Mining division | | | 2022 | 2021 | 2020 | 2019 | | --- | --- | --- | --- | --- | --- | | **Los Pelambres** | **Total** | **29,350** | 26,817 | 27,847 | 21,633 | | | Surface water | **20,093^{2}** | 15,790 | 19,481 | 13,898 | | | Groundwater | **9,249** | 11,018 | 8,358 | 7,726 | | | Supplied by third parties | **9** | 9 | 9 | 9 | | **Centinela** | **Total** | **30,902** | 29,223 | 27,178 | 26,369 | | | Sea water | **26,762^{2}** | 25,251 | 23,316 | 22,602 | | | Groundwater | **4,140** | 3,972 | 3,862 | 3,356 | | | Supplied by third parties | **-** | - | - | 410 | | **Antucoya** | **Total** | **6,521** | 6,315 | 5,923 | 5,804 | | | Sea water | **6,299^{2}** | 6,081 | 5,720 | 5,623 | | | Groundwater | **221** | 234 | 204 | 181 | | | **Total** | **5,993** | 6,653 | 7,015 | 7,015 | | **Zaldívar** | **Total** | **5,993** | 6,653 | 7,015 | 7,015 | | | Groundwater | **72,766** | 69,008 | 67,963 | 60,821 | | | Sea water | **33,061** | 31,332 | 29,036 | 28,225 | | | Surface water | **20,093** | 15,790 | 19,481 | 13,898 | | **Mining division** | Groundwater | **19,603** | 21,877 | 19,438 | 18,279 | | | Supplied by third parties | **9** | 9 | 9 | 419 | | | Sea water as a percentage of total | **45%** | 45% | 43% | 46% | 1. As defined by the ICMM, operational water is the volume of water used in operational tasks. Operational water use is, therefore, the actual volume of water required or used to sustain operational activities. 2. Water withdrawal increased as precipitation in Los Pelambres tripled in 2022 from the low levels in 2021, and Centinela Concentrates and Antucoya achieved record annual throughput. Antofagasta plc Annual Report 2022 63 Strategic Report / How we engage with our stakeholders continued ## Task Force on Climate-related ## Financial Disclosures (TCFD) The Group’s Task Force on Climate-related Financial Disclosures • Metrics & Targets, climate-related metrics – Climate Metrics (TCFD) recommendations are integrated into this report in accordance & Targets: Our climate change analysis is helping us to define additional with the Financial Conduct Authority Listing Rule LR.9.8.6(8). Progress metrics to the ones we already use (mainly to measure and manage against the recommendations is summarised below, together with an emission targets), such as the amount of capital that will be required index showing where more detailed disclosures can be found. to mitigate and adapt to climate change. We continue to improve our climate change risk management by determining the levels at which We are not yet fully consistent with three areas of the TCFD particular climate risks would trigger us taking preventative actions. recommendations, which we will progress during 2023. • Metrics & Targets, GHG emissions and related risks – Scope 3: • Strategy, impact on business – Decarbonisation Plan: We have Over the last two years we have improved our understanding of our assessed how our emission reduction plans will achieve our Scope 3 emissions and calculated our 2021 Scope 3 emissions in decarbonisation targets and further evaluation is underway on the 2022. However, we need to further improve our methodology before feasibility and implementation of the planned measures at all our we set our Scope 3 reduction targets, which we expect to do and operations. Completion is expected during 2023. disclose in 2023 or as soon as possible thereafter. ## TCFD RECOMMENDATIONS AND PROGRESS IN 2022 ### GOVERNANCE Recommendations Progress • Board oversight • Climate change scenario analysis (scenarios SSP2-4.51 for physical risk analysis and IEA’s SDS • Management’s role for transition risk analysis) was presented to the Board and incorporated into the annual long-term financial planning process for the first time. • 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 Recommendations Progress • Identified risks and opportunities • We reviewed the impact of climate change risks and opportunities as part of our 2022 • Impact on business long-term financial planning process and this allowed us to assess the impact of climate change risks during the life of each mining operation (LOM). • Business resilience • In 2022 Los Pelambres and Antucoya were awarded the Copper Mark, the copper industry’s new responsible production assurance framework, joining Centinela and Zaldívar who were awarded the Mark in 2021. • 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 1 change, we analysed a “middle of the road” climate change scenario (SSP2-4.5 ), rather than 2 the worst case scenario we used in our 2021 analysis (RCP8.5 ). 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 202264 ### RISK MANAGEMENT Recommendations Progress • Identifying and assessing risks • The Board has assessed the Company’s risk appetite for climate change as medium. and opportunities • Control metrics for measuring climate change risks were monitored during the year and the • Managing risks and opportunities owners of the risks at each operation were identified. • Integrating climate change into overall • Climate change physical risks were assessed using the SSP2-4.5 “middle of the road” scenario. risk management 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. ### METRICS AND TARGETS | Recommendations | Progress | | | --- | --- | --- | | • Climate-related metrics | • We continue to use Scope 1 and 2 emissions and emission intensity (tCO | 2 e/tCu) to monitor | | • GHG emissions and related risks | our exposure to transition risks. | | | • Targets and performance | • In 2022, we calculated our 2021 Scope 3 emissions and are refining our methodology with | | a view to setting reduction targets in 2023 or as soon as possible thereafter. • In April 2022, the last of our mining operations started using power solely from renewable sources, reducing our Scope 2 emissions by over 95% since 2021 and achieving our 2025 30%-reduction target three years early. • From the beginning of the year, we have been using an internal carbon price in the economic evaluation of bids from suppliers for specific goods and services. ## TCFD INDEX The Company has considered the relevant sections of the TCFD all-sector guidance and 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. 107 Description of management’s role in assessing and managing climate-related risks and opportunities. 60 Strategy Description of the climate-related risks and opportunities the Company has identified over the short, 60 and 66 medium and long term. Description of the impact of climate-related risks and opportunities on the Company’s businesses, 58, 60, 62 strategy and financial planning and 63 Description of the resilience of the Company’s strategy, taking into consideration different climate-related 66 scenarios, including a 2°C or lower scenario. Risk Description of the Company’s processes for identifying and assessing climate-related risks 30 Management Description of the Company’s processes for managing climate-related risks. 60 Description of how processes for identifying, assessing and managing climate-related risks are integrated 30 into the Company’s overall risk management. Metrics Disclosure of the metrics used by the Company to assess climate-related risks and opportunities consistent 60 and 65 and Targets with its strategy and risk management process. Disclosure of Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) emissions 61 and the related risks. Description of the targets used by the Company to manage climate-related risks and opportunities 61 and 63 and performance against targets. Antofagasta plc Annual Report 2022 65 Strategic Report / How we engage with our stakeholders continued ### 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 2022. This also helped us develop our investment plans and enhance our prevention and recovery control measures. In general, our 2022 analysis showed that the potential exposure of our business under the physical warming scenario decreased compared to the analysis done in 2021. This was mainly due to the change of modelling scenario used, and our improved understanding of the physical impact of climate change on our operations that we learned from the 2021 analysis. The increased financial impact of transition risk, compared with 2021, is mainly due to the better-quality information used in the 2022 analysis and the longer LOMs incorporated in 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. The analysis below does not include an estimate of the potential impact of climate change on copper demand or the copper price, which is expected to be positive but is difficult to quantify. Transition risks and opportunities have been identified over the short, medium and long term 1 Transition : IEA’s SDS $50 - 100m$50 - 100m | $1,000 - 1,500m$1,000 - 1,500m | | $1,000 - 1,500m | | | | $500 - 100m | | --- | --- | --- | --- | --- | --- | --- | | | Carbon | Investment | Change in energy costs | | Carbon tax avoided | | | | tax | in mitigation | | due to mitigation | | by mitigation | 2 Physical : Northern Zone Central Zone (Centinela, Antucoya, Zaldívar, FCAB) (Los Pelambres) IPCC’s SSP2-4.5 Choapa Pr ovinc e María El ena Tocopilla Ca lama Bolivi a Cane la municipal distr ic t Illape l muni cipal dist ri ct Centinela Port Arg ent ina Antucoya Me ji llones Centinela Los Pelambres FCAB Si er ra G orda San Pe dr o de Ata cama Punta Chungo port Antofagasta Los Vilos Sa lamanc a municipal distr ic t Lo s Vilos municipal dis trict El Mauro tailings storage facilities Anto fa gas ta | | | | Zaldívar | | Arg ent ina | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Compared with | | Risk | | Compared with | | | Risk | | | | 2021 analysis | | timeline | | 2021 analysis | | | timeline | | Decrease and/or loss | | | | Medium | | | | Short and | | | | | | = | | | | = | | | | of water supply | $0 - 50m | | | term | | | | medium term | | $100 - 200m Medium Medium Extreme rainfall events term $0-50m term $50-100m High and/or sustained Medium Medium and temperatures $0-50m term $0 - 50m long term 1. The positive impact of climate change on copper demand or the copper price, has not been quantified. 2. Physical changes in climate and the associated impacts vary by geography and will impact Antofagasta’s operations in different ways. Examples of adaptation Short and Short and Particulate matter = 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 medium term $0 - 50m medium term $50 - 100m and diesel autonomy). | | | Short and | | Medium and | | --- | --- | --- | --- | --- | | Logistics disruption | = = | | | | | | | medium term | $0 - 50m | long term | $50 - 100m Net Present Value Positive Exposure Net Present Value Negative Exposure Antofagasta plc Annual Report 202266 ## Suppliers ### Responsible supply through the robust ## oversight of suppliers’ ESG practices 26% ### is vital for the successful management Increase in purchases from SMEs ($510m) ### of our long-term relationship. Suppliers provide a range of goods and services from heavy equipment to catering and are vital to our ability to operate continuously, safely and efficiently. In 2022, our Mining and Transport divisions purchased $4.6 billion of goods and services from 3,982 companies of which 91% were based in Chile. Contractor workers, employed by some of our suppliers, make up 77% of our workforce. In December 2022, we launched our Suppliers for a Better Future programme, seeking to align contractor companies’ practices with our Purpose of developing mining for a better future. The programme provides support and sets targets on local recruitment, hiring women and reducing emissions for suppliers to achieve by 2025. It also aims to strengthen the development of local suppliers and their use of innovation and, in alliance with the Catholic University of the North (UCN), to develop the capabilities of local small and medium-sized companies (SMEs). Governance We use a digital sourcing platform (Ariba) for all procurement in order to make acquisition processes traceable, transparent and fair. We require a minimum number of companies to participate in large tenders to ensure a competitive process. Antofagasta plc Annual Report 2022 67 Strategic Report / How we engage with our stakeholders *continued* Due diligence is conducted on all potential suppliers prior to awarding a contract. We assess Company ownership, participation 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. We have in place control and management systems covering the procurement of minerals which we use to manufacture our products, in line with the OECD's due diligence guidance for responsible supply chains for minerals. Antofagasta's Compliance Model applies to both employees and contractors. It is clearly defined and is communicated regularly through internal channels, as well as being described in our Crime Prevention Manual. All contracts include clauses relating to ethics, Chilean Law N° 20.393 on bribery and asset laundering and the UK's Bribery Act and Modern Slavery Act. We conduct audits to ensure compliance with our requirements. In 2022, we increased the frequency of financial evaluations and introduced several measures, such as shorter payment times, to address greater insolvency rates among suppliers. Our Procurement team received annual refresher training on the Group's Compliance Model, Code of Ethics and Crime Prevention Manual and updated their declaration of Conflicts of Interest. Suppliers can use the Tu Voz (Your Voice) whistleblowing channel on the Group's website to make anonymous complaints. We have raised awareness of this mechanism in meetings and in written communications with our contractor workers. ![Green checkmark icon]() **For more information, see our Crime Prevention Manual** ![Green checkmark icon]() **For more information, see our 2022 UK Modern Slavery Act Statement** ### Suppliers ESG In 2022, we began applying additional environmental, social and governance (ESG) criteria to evaluate bids for contracts worth over $10 million, in order to complement the energy efficiency and safety considerations already in place. Extra points are assigned to bids from companies with robust governance, local recruitment, diversity and inclusion, as well as carbon emission reduction strategies and targets. We also started applying an internal carbon price in tenders for specific goods and services, such as explosives, mine haulage trucks and transporting personnel. Our strategy involves training small and medium-sized (SMEs), local suppliers and service providers in the Antofagasta and Coquimbo Regions on ESG concepts to help them adopt sustainable practices and to meet the ESG goals set in our Suppliers for a Better Future programme. In 2022, we held two training sessions on ESG matters directed at SMEs in the Antofagasta Region and another four aimed at suppliers from other regions. More than 200 national and regional suppliers took part. As part of our Suppliers for a Better Future programme, we also began working with supply chain sustainability rating consultants EcoVadis, in a trial to determine the ESG ratings of our suppliers. Following the evaluation, a scorecard is prepared that highlights areas for the suppliers to improve and monitor. By the end of the year, around 50 of our largest suppliers, based on spending, were participating and more will be added in 2023. We continued to address Scope 3 emissions, which are indirect emissions related to our activities caused by upstream (suppliers) or downstream processes that we do not control or own. During the year, we worked on specific supplier categories, such as explosives, grinding balls and linings, to further refine our Scope 3 emissions calculation for 2021. We plan to set a Scope 3 emissions reduction target in 2023 or as soon as possible thereafter, and include reduction targets in contracts for specific categories of suppliers. We agreed Greenhouse Gas Agreements with mining equipment suppliers Komatsu and Caterpillar to advance the development of zero-emission vehicles and machinery, which currently account for approximately 50% of our Scope 1 emissions. In addition, we worked on long-term strategies to reduce Scope 3 emissions in nine categories and began collaboration initiatives with 15 suppliers. We also signed agreements to pilot four types of electric battery vehicles in 2023 at our operations (excavators, front-end loaders, dump trucks and pickup trucks). As a member of the International Council on Mining and Metals (ICMM), we helped design ICMM's Scope 3 self-assessment tool and used it to measure our emissions. It placed us in the top three of the 26 ICMM member companies that undertook the evaluation with regard to the completeness and quality of our measurement of Scope 3 emissions. ![Green checkmark icon]() **For more information, see our 2022 Sustainability Report, our 2022 Climate Change Report and antofagasta.co.uk/suppliers22** ![img-4.jpeg](img-4.jpeg) 68 Antofagasta plc Annual Report 2022 ### Supporting local growth At Antofagasta, we seek to foster economic development in the Antofagasta and Coquimbo Regions, where our operations are based, through sourcing and promoting local goods and services. In line with our objectives, the Mining division increased the number of tender invitations to suppliers headquartered in these regions in 2022. In total, the number and value of tenders awarded by our Mining division to local suppliers increased by 49% to 7,139 and 10% to $374m respectively against 2021. On average, these local suppliers were paid within eight days or less. Due to our policy, purchases from SMEs have continued to grow to $510 million and represented 26% of increase compared to 2021. At the end of 2022, we updated our guidelines on regional procurement and recruitment that seek to promote local purchases by reducing administrative and financial barriers for SMEs in the Antofagasta and Coquimbo Regions. In response to feedback from contractor companies, we changed the guidelines to give more scope to award contracts to local companies even if they do not submit the lowest-priced bid and enable closed tenders for regional suppliers for specific contract categories. ### Accessing opportunities We continued to hold business roundtables to launch and discuss tenders as part of our efforts to help local suppliers access opportunities to bid for contracts. In November, we presented 10 tenders in a meeting with over 150 suppliers in the Antofagasta Region. In December, over 250 suppliers from the Coquimbo Region joined a meeting to discuss upcoming tenders and requirements. We also held in-person forums to get feedback on our tender processes and requirements from suppliers in the Antofagasta Region. As part of the Suppliers for a better Future programme, Los Pelambres worked with 150 suppliers over the year to improve the ability of local businesses in the Choapa Province to bid in tenders. A key component of the initiative is the one-on-one business coaching provided to participants. We also have an agreement with the Antofagasta Industrialists' Association (AIA) to use its digital database of certified suppliers (known as SICEP) to publicise upcoming tenders and update our register of potential local suppliers. ### PROMOTING INNOVATIVE SUPPLIERS Our open innovation model encourages partners and potential suppliers to understand the requirements and participate in finding solutions for our main operational challenges. A key initiative is the Pitch Days our mining operations organise in alliance with Expande, a Fundación Chile initiative that seeks to solve specific mining operation challenges with innovative solutions. In 2022, we hosted 24 Pitch Days, which led to us doing further work with the proposers on 13 of the suggested solutions. The Group's main operational challenges are also published on our Innovaminers open platform to capture original ideas from inside and outside the Company. ### Fostering local employment We encourage contractor companies to recruit employees from the Antofagasta and Coquimbo Regions and in 2022 an average of 35% of their employees were from these regions. During the year, we set a target for suppliers to hire 45% of their workforce locally by 2030. In the Choapa Province, Los Pelambres has an employment programme for contractor companies that includes a skills training programme, a job portal aimed at locals and a KPI for suppliers of labour-intensive services to recruit at least 30% of their employees locally. Since being launched in 2014, the programme has increased the proportion of people from the province hired by contractors from 15% to 48.3% in 2022. In the Antofagasta Region, we have trialled similar efforts and are encouraging contractors to publish local jobs on the new regional employment portal, rather than bringing in workers from other parts of the country. We reinforce these efforts by building human capacity in the regions where we operate through scholarships and other local training initiatives. ![Green checkmark icon]() For more information, see P56 in Communities ### ETHICAL MINIMUM WAGE Since 2020 we have required contractor companies to pay their employees an ethical wage that supports minimum living standards. In 2022, we increased the ethical minimum wage to Ch$552,000, 38% higher than Chile's legal minimum wage of Ch$400,000 at the end of 2022. ![img-5.jpeg](img-5.jpeg) Antofagasta plc Annual Report 2022 69 Strategic Report / How we engage with our stakeholders continued ## Customers In the case of copper cathode transactions, a premium, or in some ### Successful management of our relationships cases a discount, on the LME price is negotiated to reflect differences ### with our customers contributes to our in quality, logistics and financing compared with the metal exchange’s ### long-term success. standard copper contract specifications. Customers Similarly, our molybdenum contracts are made under medium- and Most copper and molybdenum sales are made under annual contracts or long-term framework agreements, with pricing usually based on Platts’ longer-term framework agreements, with sales volumes agreed for the average prices for Technical Molybdenum Oxide with a deduction to coming year. Gold and silver are contained in the copper concentrates reflect the cost of converting molybdenum sulphide concentrate into and are therefore part of copper concentrates sales. molybdenum oxide. Most sales are to industrial customers who further process the copper Across the industry, neither copper producers nor consumers tend into more value-added products – smelters, in the case of copper to make annual commitments for 100% of their respective sales or concentrate production, and copper fabricators and trading companies purchases, and normally retain a portion to be sold or purchased in the case of cathode production. We build long-term relationships on the spot market during the year. with these key smelters and fabricators, while ensuring customer In line with industry practice, our sales agreements generally provide diversification. We also maintain relationships with trading companies for provisional pricing at the time of shipment, with final pricing based on that participate in shorter-term sales agreements, or in the spot market. the average market price in the month in which settlement takes place. About 70% of our mining sales are under contracts of a year or longer For copper concentrates, the final price remains open until settlement and metals sales pricing is generally based on prevailing market prices. occurs, on average four months from the shipment month. Settlement for the gold and silver contained in the copper concentrates occurs Structure of sales contracts approximately one month after shipment. Copper cathode sales remain Typically, our sales contracts set out the annual volumes to be supplied open for an average of one month from the month of shipment. and the main terms for the sale of each payable metal, with the pricing Settlement for copper in concentrate sales is later than for copper of the contained copper in line with LME prices. cathode sales, as copper in concentrate requires more processing to In the case of concentrates, a deduction is made from LME prices produce refined copper for sale. Molybdenum sales generally remain to reflect TC/RCs, the smelting and refining costs to process the open for two or three months after the month of shipment. 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. ### REVENUE BY PRODUCT AND CUSTOMER LOCATION EUROPE ## 18% NORTH AMERICA JAPAN Copper ## 5% ## 28% Molybdenum Gold Transport REST OF Silver ASIA PACIFIC ## SOUTH 39% AMERICA ## 10% 84% 7% Antofagasta plc Annual Report 202270 5% 3% 1% ## Shareholders ### The Company is listed on the main market ### 2022 Shareholder engagement calendar ### of the London Stock Exchange and is Q1 CEO presented at an industry conference for institutional ### a constituent of the FTSE100 index. investors in the US ### As explained in the Directors’ Report In-person and virtual one-on-one and small group meetings with some 100 investors, of which senior management participated ### on page 168, the controlling shareholders of in 69% ### the Company hold approximately 65% of the Virtual presentation of full-year 2021 results by the CEO, CFO and ### Company’s total capital. The majority of Vice President of Corporate Affairs and Sustainability, followed by ### the Company’s ordinary shares not held a question and answer session open to all investors, and a virtual | by the controlling shareholder are held by | | roadshow with investors in Europe and the US | | --- | --- | --- | | institutional investors, mainly based in the | | Investor relations team attended two virtual investor conferences | | UK and North America. | Q2 | CEO presented at an industry conference for institutional | investors in the US We maintain an active dialogue with institutional shareholders and sell-side analysts, as well as with potential shareholders. This Video conference question and answer call open to all investors communication is managed by our investor relations team in London and by the CEO, CFO and Vice President of Corporate Affairs and includes a formal programme of presentations and roadshows to update Sustainability, following the release of the Q1 production report institutional shareholders and analysts on developments at Antofagasta. Virtual one-on-one and small group meetings with some 125 As the travel restrictions imposed by the COVID-19 pandemic lifted investors, of which senior management participated in 65% during 2022, we held an increasing number of in-person meetings with Annual General Meeting in London institutional investors and sell-side analysts, including during international Investor relations team attended four virtual investor conferences investor roadshows, at industry conferences and panel events and with and two in-person conferences in the US banks’ equity sales teams. These were attended by the CEO and/or various members of the senior management team, including the CFO, Q3 Virtual presentation of half-year 2022 results by the CEO, the Vice President of Corporate Affairs and Sustainability and the Vice CFO and Vice President of Corporate Affairs and Sustainability, President of Strategy and Innovation. We also visited major shareholders followed by a question and answer session open to all investors and proxy voting agencies as part of a corporate governance roadshow London (in-person) and Frankfurt (virtual) roadshow led by our Senior Independent Director and the Chair of our Remuneration and Talent Management Committee. US East Coast roadshow We publish quarterly production figures as well as half-year and full-year Virtual one-on-one and small group meetings with some 100 financial results. Copies of our production reports, financial results, investors, of which senior management participated in 63% presentations and other ad-hoc press releases are available on our Investor relations team attended two virtual investor conferences website. During 2022 we also published Sustainability Reports for our Q4 Video conference question and answer call open to all investors Mining and Transport divisions, as well as a Tax Report, all of which are by the CEO and CFO following the release of the Q3 available on our website. production report What investors focused on most in 2022 Virtual one-on-one and small group meetings with some • Our ability to achieve our full-year production and cost guidance 60 investors, of which senior management participated in 27% • The drought in central Chile and its impact on the Company Corporate Governance roadshow with our Senior Independent • The progress and potential impact of the planned revisions Director and Chair of the Remuneration and Talent to the Chilean mining royalty and tax legislation and the rewriting Management Committee of the Chilean constitution Investor relations team attended one investor conference • ESG issues, particularly water availability and emissions, in London and our response to climate change • Progress on the Los Pelambres Expansion project, including the Desalination Plant • Free cash flow generation and capital allocation • Our capital expenditure programme and the potential of our longer-term growth projects • Supply and demand factors in the world copper market • Labour negotiations at our operations Antofagasta plc Annual Report 2022 71 Strategic Report / How we engage with our stakeholders *continued* # 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.** ## Governments and regulators engagement 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 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 2022 totalled $800 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 2022. However, we often contribute towards the financing of projects benefiting 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. Another example of our active participation in a public-private alliance is the Provincial Water Working Group. This is 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 a referendum in October 2020, the Chilean people voted in favour of rewriting the country's constitution. This process was conducted through a Constitutional Assembly of 155 members elected in a national vote in May 2021. The Constitutional Assembly proposed the text of a new constitution, which was rejected in a national referendum in September 2022. Congress has now adopted a new plan for drafting the constitution which includes specific boundaries for the scope of the drafting process with the election of a Constitutional Council in May 2023 and the appointment of a Committee of Experts. The new constitution will be put to a vote in a national referendum in December 2023. ## Proposed mining royalty The Government presented a revised draft mining royalty bill to Congress in October 2022 which changes the structure and increases the rates compared with the current royalty. This draft was approved by the Senate Mining and Energy Committee in January 2023 and passed to the Senate Treasury Committee for discussion. The bill will then be debated in the full Senate before being passed to the lower house for its consideration. 72 Antofagasta plc Annual Report 2022 ## Non-financial information statement The table below sets out where stakeholders can find information in the Strategic Report on non-financial matters, as required under the Non-Financial Reporting Directive requirements. As described in this report, the effective application of these Policies and Standards underpins the Group´s management of the risks in relation to these matters. Reporting requirement Relevant policies and standards Content Page Page Sustainability Value Chart Letter from the Chairman 6 How we engage with our 46 stakeholders | Sustainability Policy | Letter from the CEO | 9 | | | | --- | --- | --- | --- | --- | | | | | Sustainability and Stakeholder | 137 | | ICMM Guidelines | Our approach to sustainability | 42 | | | Management Committee Safety and health Safety and Occupational Health Strategy Safety and Occupational Health 51 Safety risk management 52 Strategy | Special Corporate Safety and Health | | | Performance | 53 | | --- | --- | --- | --- | --- | | Regulation for Contractors and | Occupational health risk | 52 | | | | Subcontractors (RECCS) | management | | | | Fatal Risk Standard (ERFT) Occupational Health Standard (ESO) Environmental Environmental Management Model Environmental management 57 Climate change 60 matters Integral closure of mining operations Environmental compliance 57 Carbon footprint 61 standard Responsible production 58 Energy management 62 Climate change standard Circular economy 59 Water management 63 Water management standard Biodiversity 59 TCFD 64 Biodiversity standard Air quality 59 Tailings policy Mine closure 59 Global Industry Standard on Tailings Management | Our people People Strategy | | Employee wellbeing | 48 | Labour relations | 50 | | --- | --- | --- | --- | --- | --- | | | Diversity and Inclusion Strategy | Inclusive culture | 49 | Aligning contractors | 50 | | | | Building human capital | 50 | | | | Social matters Social Management Model | | Social Management Model | 54 | Open social innovation | 55 | | | Engagement Standard | Addressing social concerns | 54 | Culture and heritage | 56 | | | Management of initiatives standard | Flagship programmes | 55 | Local jobs | 56, 61 | | | | Impact measurement | 55 | Engagement mechanisms | 56 | | Suppliers Code of Ethics | | Suppliers | 67 | Local alliances | 69 | | | Purchase and contracts guidelines | Suppliers ESG | 68 | Supplier development | 69 | | | Direct award procedure | Local suppliers | 69 | | | Material management policy | Human Rights69 Code of Ethics | | Modern Slavery Act 36 Respectful, diverse and inclusive | | | 49 | | --- | --- | --- | --- | --- | --- | | | Human Rights Policy | | | work culture | | | Anti-corruption and | Code of Ethics | Business integrity and compliance | 36 | Compliance management 36 | | anti-bribery Compliance Model Code of Ethics 36 Anti-Corruption Model Antitrust Protocol Description of Risk Management Framework 24 principal risks and Principal risks 26 impact on business activity Description of the The mining life cycle 16 business model Non-financial Key 2022 highlights 2 Performance Key Performance Indicators 22 Indicators Total economic contribution 41 Antofagasta plc Annual Report 2022 73 Strategic Report ## “Our financials remain robust, ## Operating ## driven by operational and cost ## discipline across our assets. ## and Financial ## However, the continuing drought ## Review ## in Chile and increasing inflation is ## reflected in our full year financial ## performance compared to the Operating review ## exceptional 2021.” Mining division 76 Los Pelambres 78 Mauricio Ortiz | Centinela | 80 | Chief Financial Officer | | --- | --- | --- | | Antucoya | 82 | | | Zaldívar | 83 | | | Transport division | 84 | | | Growth projects and opportunities | 86 | | | Exploration activities | 89 | | | Key costs | 90 | | | Operating excellence and innovation | 92 | | | Financial review | 94 | | Antofagasta plc Annual Report 202274 75Antofagasta plc Annual Report 2022 Strategic Report / Operating review ## Mining division ### Antofagasta owns and operates four mines. ## “Our operational reliability and ### Los Pelambres is located in the Coquimbo ## utilisation rates continue to improve ### Region of central Chile and Centinela, ## with Centinela and Antucoya ### Antucoya and Zaldívar are in the ## Antofagasta Region of northern Chile. reporting record throughput rates ## for the year.” Mauricio Larraín Vice President of Northern Operations ### Production highlights | 646.2k tonnes | | | | 176.8k ounces | | | | --- | --- | --- | --- | --- | --- | --- | | of copper produced | | | | of gold produced | | | | | 770.0 | | | | 282.3 | | | 725.3 | | 733.9 | 721.5 | | | 220-240 | 252.2 646.2 210.1 204.1 176.8 20192018 2020 2021 2022 2023 20192018 2020 2021 2022 2023 | 9.7k tonnes | $1.61/lb | | | --- | --- | --- | | of molybdenum produced | Net cash costs | | | 13.6 | | 1.65 | 1.61 12.6 10.0-11.5 11.6 10.5 1.29 1.22 1.20 9.7 1.14 670-710 20192018 2020 2021 2022 2023 20192018 2020 2021 2022 2023 Antofagasta plc Annual Report 202276 Forecast Forecast Forecast Forecast PERU BOLIVIA ### ANTOFAGASTA ### REGION ### CENTINELA ### PORT ANTUCOYA ### CENTINELA ### MEJILLONES ### ANTOFAGASTA ### ZALDÍVAR ### SANTIAGO ### COQUIMBO ### REGION ARGENTINA ### LA SERENA ### ILLAPEL ### LOS ### PUNTA PELAMBRES ### CHUNGO PORT LOS VILOS Los Pelambres Centinela Antucoya Zaldívar Capital city Cities and town centres Ports Antofagasta plc Annual Report 2022 77 Strategic Report / Operating review continued ## 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. Copper production Gold production Revenue ## 275.0k tonnes 43.1k ounces ## $2,559m 359.6 60.3 45-55 -29.3% 324.7 53.2 EBITDA 275.0 43.1 ## $1,473m -41.7% 2020 2021 2022 2023 2020 2021 2022 2023 | Molybdenum production | | Net cash costs | | | Lifecycle of the mine | | --- | --- | --- | --- | --- | --- | | 7.2k tonnes | | $1.10/lb | | | | | 10.9 | | | | 1.25 | | | | 7.5-8.5 | | 1.10 | | | 9.2 0.89 7.2 0.81 12 years 320-335 20352000 2023 MINE LIFE 2020 2021 2022 2023 2020 2021 2022 2023 23 years 78 Antofagasta plc Annual Report 2022 Forecast Forecast Forecast Forecast ### 2022 Performance Capital expenditure Capital expenditure during 2022 was $890 million, including $251 million Operating performance on sustaining capital expenditure and $496 million on growth projects. As expected, the prolonged drought at Los Pelambres impacted copper production, which was also affected by the concentrate pipeline incident. As at the end of 2022, the Los Pelambres Desalination Plant and Concentrator Expansion projects, including design, procurement and EBITDA was $1,473 million, compared with $2,526 million in 2021, construction, were 93% complete, and both are due to be in production reflecting lower copper realised prices, lower sales volumes and higher during the second quarter of 2023. operating costs. Production ### Outlook for 2023 Copper production for the year decreased by 15.3% to 275,000 The forecast production for 2023 is 320–335,000 tonnes of copper, tonnes, to mainly due to the lower throughput due the expected 7.5–8,500 tonnes of molybdenum and 45–55,000 ounces of gold. restrictions on water availability during 2022 as a result of the Higher production is due to higher throughput, as the desalination and accumulated impact of the long-running drought conditions in the concentrator expansion are expected to be in production by the end Los Pelambres area, and the pipeline incident. Molybdenum production of Q2 2023. in 2022 was 7,200 tonnes, 21.7% lower than in 2021 due to a decline in throughput and grades. Gold production was 43,100 ounces, Cash costs before by-product credits are forecast to be approximately 19.0% lower than the previous year. $1.85/lb and net cash costs $1.25/lb, reflecting higher production and decreased input costs, offset by inflation and a stronger Chilean peso. Cash costs Cash costs before by-product credits were $1.84/lb, 15.7% higher than in 2021. This was due to the lower production, higher input prices (mainly diesel, explosives and energy) and general inflation, partially offset by the weaker Chilean peso. By-product credits increased from $0.70/lb in 2021 to $0.74/lb in 2022 due to higher realised by-product prices despite lower production. Net cash costs were $1.10/lb, 21c/lb higher than in 2021, reflecting the increase in cash costs before by-product credits, partially offset by higher by-product credits. 79Antofagasta plc Annual Report 2022 Strategic Report / Operating review continued # 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. Copper production 247.5k tonnes ![img-6.jpeg](img-6.jpeg) Gold production 133.7k ounces ![img-7.jpeg](img-7.jpeg) Revenue $2,406m -19.3% EBITDA $1,157m -39.7% Molybdenum production 2.4k tonnes ![img-8.jpeg](img-8.jpeg) Net cash costs $1.75/lb ![img-9.jpeg](img-9.jpeg) Lifecycle of the mine ![img-10.jpeg](img-10.jpeg) 80 Antofagasta plc Annual Report 2022 ### 2022 Performance Capital expenditure Capital expenditure was $857 million, including $431 million on mine Operating performance development, $252 million of sustaining capital expenditure and Centinela Concentrates’ grades declined in 2022. However, operational $174 million on development capital expenditure. reliability continued to improve and throughput averaged above design capacity for the year as a whole. ### Outlook for 2023 EBITDA at Centinela was $1,157 million, compared with $1,919 million Production is forecast at 235–250,000 tonnes of copper, in 2021, on lower copper and gold sales volumes, lower copper realised 175–185,000 ounces of gold and 2.5–3,000 tonnes of molybdenum. prices and higher unit costs. Copper production will decrease compared with 2022 as grades fall Production at Centinela Cathodes. Copper production was 247,500 tonnes, 9.7% lower than last year due Cash costs before by-product credits are forecast to be approximately to expected lower ore grades at Centinela Concentrates, partially offset $2.55/lb and net cash costs $1.70/lb. by higher throughput. Production of copper in concentrate was 149,300 tonnes, 19.5% lower than in 2021, reflecting expected lower ore grades (18.3%), partially offset by throughput above the design capacity of 105,000 tonnes of ore per day. Copper cathode production was 98,200 tonnes, 10.6% higher than in 2021 mainly due to expected higher grades and recoveries, despite lower throughput. Gold production was 133,700 ounces, 32.8% lower than in 2021, as grades, which are correlated to copper grades, and recoveries decreased. Molybdenum production was 2,400 tonnes on increased grades. Cash costs Cash costs before by-product credits in 2022 were $2.44/lb, 30.5% higher than in 2021 due to the impact of lower copper production and higher input costs. By-product credits were $0.69/lb, 5c/lb lower than in 2021 due to lower gold production partially offset by higher molybdenum production and price. Net cash costs were $1.75/lb, 62c/lb higher than 2021. Antofagasta plc Annual Report 2022 81 Strategic Report / Operating review continued # 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. ## Revenue $704m +0.8% ## EBITDA $261m -22.5% ## Copper production 79.2k tonnes ![img-11.jpeg](img-11.jpeg) ## Net cash costs $2.50/lb ![img-12.jpeg](img-12.jpeg) ## Lifecycle of the mine ![img-13.jpeg](img-13.jpeg) ## 2022 Performance ### Operating performance Antucoya continued to improve its operational reliability and consistency during the year with throughput increasing by 4.6% compared with 2021. EBITDA was $261 million compared with $337 million in 2021, reflecting higher operating costs and the lower realised copper price. ### Production Antucoya produced 79,200 tonnes, 0.8% higher than last year due to higher throughput, which averaged 89,400 tonnes per day for the year, the plant's design capacity. ### Cash costs Cash costs for 2022 were $2.50/lb, 22.5% higher than in 2021 due to increased input costs, particularly for sulphuric acid, diesel and explosives. ### Capital expenditure Capital expenditure was $67 million, including $58 million on sustaining capital expenditure. ## Outlook for 2023 Production is forecast to be 70–75,000 tonnes of copper and cash costs are expected to be approximately $2.45/lb. 82 Antofagasta plc Annual Report 2022 ## Mining division: ## Zaldívar ### Zaldívar is an open-pit, heap-leach copper EBITDA ### mine which produces copper cathodes using ### the solvent extraction and electrowinning ## $147m ### (SX-EW) process. The mine is 3,000 metres -14.8% ### above sea level, approximately 1,400 km north ### of Santiago and 175 km south-east of the city ### of Antofagasta. Copper production Net cash costs Lifecycle of the mine ## 44.5k tonnes $2.39/lb 2.70 48.2 2.39 2.39 44.0 44.5 1.80 13 years 20361995 2023 2020 2021 2022 2023 2020 2021 2022 2023 ### 2022 Performance Other matters Operating performance Zaldívar submitted an Environmental Impact Assessment (EIA) in 2018 During 2022, Zaldívar completed construction of its Chloride leach which included an application to extend its water extraction and mining project, which is being ramped up in 2023. permits to 2029 (with decreasing activity levels in 2030-2031). Currently, Zaldívar is permitted to extract water and mine into 2025 and Attributable EBITDA was $147 million compared with $173 million 2024, respectively. Zaldívar continues to work diligently with the in 2021. authorities and consult with the local indigenous community. Production To ensure the continuity of the operation, in March 2023 Zaldívar Attributable copper production was 44,500 tonnes, 1.1% higher than submitted a DIA (Declaration of Environmental Impact), a more limited in 2021 mainly due to higher grades, partially offset by lower throughput. scope and simplified procedure than an EIA, requesting that the mining permit be extended from 2024 to 2025 so as to expire at the same date Cash costs as the current water permit. At the same time Zaldívar withdrew the Cash costs were $2.39/lb, unchanged from the previous year. The long 2018 EIA application. It is expected that an alternative and updated EIA leach cycle of approximately 210 days generates a time lag in costs, so application to extend the water and mining permits beyond 2025 will be the full effect of higher input prices is not fully reflected. submitted which will also include a plan for a transition from the current Capital expenditure continental water source on completion of the extended water permit, to Attributable capital expenditure in 2022 was $55 million, of which either procuring water from a third party or using raw sea water. $44 million was sustaining capital expenditure. Zaldívar’s final pit phase, which represents approximately 20% of 45-50 current ore reserves, impacts a portion of Minera Escondida’s mine ### Outlook for 2023 property, as well as infrastructure owned by third parties (road, MINE LIFE railway, powerline and pipelines). Mining of the final pit phase is subject Attributable copper production is forecast to be 45–50,000 tonnes at a cash cost of approximately $2.70/lb. to agreements or easements to access these areas and relocate this infrastructure. 28 years Antofagasta plc Annual Report 2022 83 Forecast Forecast Strategic Report / Operating review continued ## Transport division ### 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. 2022 Tonnage transported ## 7,108k tonnes 7,108 6,533 6,702 6,444 Revenue Tocopilla María Elena ## $193m Calama +13.8% Sierra Gorda EBITDA Mejillones ## $80m Antofagasta Region +17.3% Antofagasta Customer map Road route Rail route FCAB customers Taltal Antofagasta plc Annual Report 202284 2022202120202019 ![img-14.jpeg](img-14.jpeg) ## 2022 Performance The Transport division continued to improve its operating activity through the implementation of its Management Model, which is based on five key pillars: operating excellence, growth, transformation, community affairs and urban development. ### Operating performance Tonnage transported in 2022 increased by 6.1% to an all-time record 7.1 million tonnes as new transport contracts have ramped up during the year. EBITDA was $80 million, 17% higher than in 2021, reflecting the higher revenue from increased volumes and better contracted sales prices. ### Costs and operating efficiency The division has implemented several operational efficiency improvements this year with positive results that led to increased volumes and cost optimisation which will ensure its long-term competitiveness. In addition, it continued its Cost and Competitiveness Programme to improve its cost structure, revenue stream and operating standards, achieving benefits of some $9 million during the year. ### Sustainability The maturity of the safety processes applied at the division continued to show improvement, with the division recording its sixth year with no fatalities and an LTIFR (Lost Time Injury Frequency Rate) significantly lower than the average in the Chilean rail and truck transport industries. Also, in line with the Group's Diversity and Inclusion Policy, the number of women and people with disabilities in the division increased to 19.9% and 1.4% of the total workforce respectively. ## Outlook for 2023 The division has won or renewed nine contracts in 2022 and will continue with the same focus in 2023. Over the coming years, the division has a portfolio of projects that will allow it to increase its bulk materials transport volumes, mainly for the copper and lithium industries. The division continues to advance its plans to convert its land in the centre of the city of Antofagasta from industrial to urban use. This has involved extensive consultation with communities, neighbours and other stakeholders. Remediation work will start in 2023. Antofagasta plc Annual Report 2022 85 Strategic Report / Operating review continued ## Growth projects ## and opportunities Annual copper production will be increased by an average of 60,000 ### Our approach to considered growth means that tonnes per year over 15 years, starting at approximately 40,000 tonnes ### we focus on value, which includes controlling per year for the first four to five years and rising to 70,000 tonnes per ### capital costs and optimising production at our year for the rest of the period as the hardness of the ore increases and the benefit of the higher milling capacity is fully realised. ### existing operations, and the development of ### new mining operations to deliver replacement In 2020, the decision was made to change the scope of the project and double the planned capacity of the desalination plant from 400 l/s to ### and new production in the future. We achieve 800 l/s. However, the additional work on this expansion that can be ### this through careful project management and carried out during Phase 1 is limited by what is allowed under the ### constant monitoring of the efficiency of our permits that have already been issued so the remaining work will be treated as a separate project subject to the receipt of the necessary ### mines, plants and transport infrastructure. permits. The cost of the additional work is included in the Phase 1 The Zaldívar Chloride Leach project was completed on time and on capital cost. budget early in the year, pre-stripping of the Esperanza Sur pit was By the end of 2022, the desalination plant and the water pipeline were completed in July, the Los Pelambres desalination plant started its 95.7% complete and commissioning was under way, with production pre-commissioning in November and the concentrator expansion expected in the second quarter of 2023. At the concentrator plant at Los Pelambres will be completed by the end of March 2023. expansion site, progress was 91.0% with production also expected in the Los Pelambres Expansion second quarter of 2023. This expansion project is divided into two phases. Phase 1 is expected to A detailed review of the project schedule and costs in early 2022 be in production in the second quarter of 2023 and Phase 2 by the end resulted in the capital cost estimate for Phase 1 being increased to $2.2 of 2025. billion (from $1.7 billion). Of this increase, approximately $220 million Phase 1 was related to the impact of COVID-19 on costs and the construction This phase is designed to optimise throughput within the limits of the schedule, and $170 million was related to general inflation, including existing operating, environmental and water extraction permits. increased input prices, wages, labour incentives and logistics costs, with the balance reflecting other adjustments to implementation plans and an As mining progresses at Los Pelambres, ore hardness will increase. updated contingency provision. The expansion is designed 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 expansion is 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. Antofagasta plc Annual Report 202286 ## Phase 2 – Future expansion Following the decision in 2020 to increase the size of the desalination plant, Phase 2 of the expansion now requires two separate Environmental Impact Assessment (EIA) applications; one for the expansion of the desalination plant and one for the extension of the mine life of Los Pelambres through an increase in the size of the El Mauro tailings storage facility. The latter EIA will also provide the option to further increase the throughput capacity of the concentrator plant. ### Desalination plant expansion This project will protect Los Pelambres from the future impact of climate change and the deteriorating availability of water in the region. The project cost will be reported as part of the Group's sustaining capital expenditure. 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. In 2021 Los Pelambres submitted the EIA required for this project, which includes the desalination plant expansion and two other sustaining capital infrastructure projects, the replacement of the concentrate pipeline and the construction of certain planned enclosures at the El Mauro tailings storage facility. EIA approval is expected in time for the project to be completed in 2025/26, by which time over 95% of Los Pelambres's water needs will be fulfilled by desalinated or recirculated water. ### Mine life extension The current mine life of Los Pelambres is 12 years and is limited by the capacity of the El Mauro tailings storage facility. The scope of the second EIA will include increasing the capacity of the tailings storage facility and the mine waste storage. This will extend the mine's life by a minimum of 15 years, accessing a larger portion of Los Pelambres's six billion tonnes of mineral resources. The EIA will also provide for the option to increase throughput to 205,000 tonnes of ore per day, increasing copper production by 35,000 tonnes per year. The capital expenditure to extend the mine life was estimated at approximately $500 million in a 2014 pre-feasibility study, with most of the expenditure on mining equipment and increasing the capacity of the concentrator and the El Mauro tailings facility. Key studies on tailings and waste storage capacity have advanced and community consultation is under way. The environmental and social studies are being prepared and should be submitted to the authorities during 2023/24 as part of the EIA application. ### Zaldivar Chloride Leach This project is expected to increase copper recoveries by approximately 10 percentage points, with further upside in recoveries possible depending on the type of ore being processed. This will increase copper production at Zaldivar by approximately 10–15,000 tonnes per annum over the remaining life of the mine. The project was completed in early 2022 at a total capital cost of $190 million. The project included an upgrade of the Solvent Extraction (SX) plant, new reagents facilities and the construction of additional washing ponds for controlling the chlorine levels. Ramp-up is currently underway to achieve the full improvement in recoveries and will extend into 2023. As the Group equity accounts for its interest in Zaldivar, capital expenditure at the operation is not included in Group total capital expenditure amounts. ## Esperanza Sur pit The Esperanza Sur pit is 4 km south of the Esperanza pit, close to Centinela's concentrator plant. The deposit contains 1.4 billion tonnes of reserves with a grade of 0.4% copper, 0.13g/t of gold and 0.012% of molybdenum. Pre-stripping by a contractor was completed in July and Centinela has taken over the operation of the pit using a fleet of 11 autonomous trucks, the first to be used by the Group. Ore from the pit is now being processed at the Centinela concentrator. The opening of the Esperanza Sur pit improves Centinela's flexibility in supplying its concentrator and, over the initial years, the higher-grade material from the pit will increase production by some 10–15,000 tonnes of copper per year, compared with production levels if the material was supplied solely from the Esperanza pit. This greater flexibility will allow Centinela to smooth and optimise its year-on-year production profile, which has in the past been variable. Anticipate the global trend 87 Strategic Report / Operating review *continued* ### **Centinela Second Concentrator** We are currently evaluating the construction of a second concentrator and tailings deposit some 7 km from the existing concentrator, to take place in two phases. The EIA for both phases was approved in 2016. Detailed engineering plans and costings have recently been updated for Phase 1 of the project and key contracts finalised, subject to Board approval of the project. 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 will move Centinela into the first cost quartile of global producers. The Phase 1 capital cost is estimated at $3.7 billion, including the cost of the new water supply system. The increase on the previously quoted 2015 pre-feasibility estimate of $2.7 billion reflects inflation, design improvements, heightened environmental and other regulatory requirements, and the results of advanced engineering and a more detailed execution plan. 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. The decision by the Board on whether to proceed with the project is expected in 2023, with timing dependent on the outcome of ongoing discussions on the tax reform and mining royalty bills and the rewriting of Chile's constitution. Work on Phase 2 would only start once construction of Phase 1 is completed and it is operating successfully. The second concentrator and its potential further expansion to 150,000 tonnes of ore per day will source ore initially from the recently opened Esperanza Sur pit and later from the Encuentro pit. The sulphide ore in the Encuentro pit lies under the Encuentro Oxides reserves, which are expected to be depleted by 2026. These expansions will further progress maximising the potential of Centinela's large mineral resource base. During 2022, the Company continued the tender process inviting third parties to provide water for Centinela's current and future operations by acquiring the existing water supply system and building the new water pipeline. This process is expected to be completed in 2023. The outsourcing of the water supply will only proceed if it improves the net present value of the project. ### **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, 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 and producing three separate concentrates – copper, nickel/cobalt and PGM. In 2019, Twin Metals submitted its Mine Plan of Operations (MPO) and Scoping Environmental Assessment Worksheet Data Submittal, to the US Bureau of Land Management (BLM, a bureau in the Department of Interior) and the Minnesota Department of Natural Resources (DNR), respectively. However, over the past two years, while the Twin Metals project was advancing its environmental review, several actions were taken by the federal government that have changed the potential outcomes for the project. In 2021, the BLM rejected advancing Twin Metals' preference right lease applications (PRLAs) and prospecting permit applications (PPAs). In early 2022, the Department of Interior (DOI) took an additional action through a legal opinion issued by the Office of the Solicitor (M-Opinion). This action arbitrarily cancelled Twin Metals' federal mining leases 1352 and 1353, citing concerns with the reinstatement and renewal process. Also in early 2022, the BLM stopped its evaluation of Twin Metals' MPO and an administrative court dismissed Twin Metals' appeal of that decision. In August 2022, Twin Metals filed a claim in federal court challenging the administrative actions resulting in the rejection of the PRLAs, the cancellation of its federal leases 1352 and 1353, the rejection of its MPO and the dismissal of the administrative appeal of the MPO rejection. Twin Metals considers the actions of the government to be arbitrary and capricious, contrary to the law and in violation of its rights. This action is pending. In January 2023, the DOI issued an order effectively banning mining in approximately 225,000 acres of the Superior National Forest for 20 years, subject to valid existing rights. This action alone does not prevent Twin Metals from proceeding with the project since it does not affect its pre-existing rights. ### **Reko Diq project** In 2019, the World Bank Group's International Centre for Settlement of Investment Disputes ("ICSID") awarded $5.84 billion in damages (compensation and accumulated interest as at the date of the award) to Tethyan Copper Company Pty Limited ("Tethyan"), the joint venture held equally by the Company and Barrick Gold Corporation ("Barrick"), in relation to an arbitration claim filed against the Islamic Republic of Pakistan ("Pakistan") following the unlawful denial of a mining lease for the Reko Diq project in Pakistan in 2011. In March 2022, the Company reached an agreement in principle with Barrick and the Governments of Pakistan and Balochistan on a framework that provided for the reconstitution of the Reko Diq project, and a pathway for the Company to exit the Reko Diq project. In December 2022, the parties entered into definitive agreements under which the project was reconstituted under Tethyan and a consortium of Pakistani state-owned enterprises acquired shares in the Tethyan subsidiary which holds the project, and the ICSID award was resolved. The proceeds from the acquisition of the shares of Tethyan's subsidiary will be held by Tethyan until they are distributed to the Company before the end of 2023. An exceptional gain of $945 million has been recognised in 2022 and is subject to final payment during 2023. For more information please see Note 17 to the financial statements. 88 Antofagasta plc Annual Report 2022 ## Exploration activities The project is jointly held with Barrick Gold, with Antofagasta the ### Our aim is at least to replace the mineral majority shareholder and operator. ### resources mined at our operations each year In addition, we advanced drilling evaluation at several projects in the ### and to ensure Antofagasta’s sustainable and Centinela Mining District, maintaining our focus on identifying new ### long-term growth. In 2022 our mineral high-quality projects with leachable oxide mineralisation in our properties ### resources increased by 1 billion tonnes. and in ground held by third-parties. Exploration remains a key contributor to the sustainable and long-term International embedded growth of the Group´s copper business. Our international programme has a strong focus on Peru, including the development of a diversified land portfolio with long-term and significant After the lifting of restrictions imposed during the COVID-19 pandemic, potential in the prospective coastal and Miocene belts. As at the end of exploration activities resumed as normal, subject to a few additional the year, permits are being sought to test an exploration target in the control protocols. We remain focused on favourable jurisdictions in the country´s southern coastal belt. Americas, particularly in Chile, Peru, Canada and the USA. Exploration efforts in North America remain concentrated on the key In Chile, we are pursuing brownfield and greenfield projects and in the copper belts in British Columbia and Arizona/Nevada, with the GEM other countries we have generative programmes, identifying early-stage team seeking joint venture opportunities with companies that have projects while remaining open to M&A opportunities. attractive land holdings, local knowledge and resources. The Global Exploration Management (GEM), team based in Santiago leads all the Group’s exploration activities with the local offices in Lima and Toronto reporting to the GEM on progress in Peru and North America, respectively. Exploration was conducted using these in-house teams, utilising a well-balanced portfolio of land holdings in Chile and Peru while 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 $10 million compared to 2021, to $113 million. Chile Our exploration programmes remain 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, we did 80,000 metres of drilling, 27% more than in 2021, mainly at our two advanced projects, Cachorro and Encierro. Cachorro is in the western Atacama Desert in northern Chile, 100 km north-east of the city of Antofagasta and 1,100 km north of Santiago. It reported its maiden inferred resources in 2021 and these were increased by over 70% during 2022 to 242.4 Mt at 1.21% copper (cut-off grade of 0.5% copper), making the project one of the most important manto-type deposits in the northern coastal belt in Chile. It lies between Antucoya and Centinela and may benefit from the use of their 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 we announced its maiden inferred resources of 522 Mt at 0.65% copper, 0.22 g/t gold and 74 ppm molybdenum (cut-off grade of 0.5% copper) in June 2022. 89Antofagasta plc Annual Report 2022 Strategic Report / Operating review continued ## Key costs ### Our mining operations depend on many inputs, Labour Accessing a diverse and talented workforce is key to our success. ### from energy and labour to acid and fuel, the Our employees accounted for 11% of our production costs. Labour ### most important of which are reviewed below. agreements are in place with each of the unions at our operations Contractor services, maintenance and spare parts account for 42% of and generally last for a period of three years, at the end of which they the Mining division’s total production costs, and energy and labour are are renegotiated. the largest direct costs, accounting for 11% each. As concentrate Our employees’ wages are adjusted quarterly for inflation. This means producers, Los Pelambres and Centinela require reagents and grinding labour costs structurally increase by more than inflation, but we aim to media. As cathode producers, Centinela, Antucoya and Zaldívar use compensate for this with productivity improvements. the SX-EW process and require sulphuric acid. The availability, cost and supply reliability of these inputs are central to our cost management Service contracts and key supplies strategy, which focuses on cost control and security of supply. For key commercial contracts, such as mining equipment, fuels, lubricants, critical spares, tyres, reagents, grinding balls, explosives and Energy mine maintenance, negotiations are managed centrally to generate Energy is a strategic resource for our Group and supply is maintained synergies and economies of scale. The significant savings this achieves through a strategy that considers four factors: safety, cost, efficiency allows us to implement new controls that improve competitiveness and and source. For this reason, in addition to reducing the cost of our productivity from our contractor companies. We have linked our supply electricity, we are working on improving our energy consumption prices to the respective underlying commodity, to minimise the impact efficiency and reducing our emissions. on our margins. All of our operations are on the country’s main grid, the National We have a challenging optimisation programme at corporate and Electrical System (SEN), and source power under medium- and operations levels to improve the administration, control and risk long-term contracts called Power Purchase Agreements (PPAs). management of our service contracts. The procurement team has a In recent years, renewable technologies have significantly reduced in standardised way of working and considerable technical knowledge, and cost and many renewable power plants are being built in Chile, mainly in has developed effective approaches to managing the purchase of goods the north of the country. The cost of renewable power is significantly and services. Depending on the strategic position of the supplier, these lower than power from conventional sources. range from pure price competition with e-auctions to long-term Group-wide agreements with mechanisms and incentives that provide The transition to using solely renewable power, with its lower costs and benefits for both parties. lower emissions, has been important for both the Company’s carbon footprint and its costs. Energy accounted for 11% of our total production The successful management of supplier relationships contributes to our costs in 2022. 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. This allows us to work collaboratively on key challenges ## “The transition to using such as developing zero-emission trucks and other initiatives linked to our emission reduction commitments. ## solely renewable power With the global disruption of the supply chain caused by COVID-19, we implemented contingency plans to maintain the quality and timely ## has been important for delivery of spare parts and materials, thus ensuring operational continuity and cost containment. As disruption continues due to the war ## both the Company’s in Ukraine, we have strengthened control of our supply chain by adopting new technologies for the continuous monitoring of our sources of supply. ## carbon footprint and In 2022, we had around 3,800 different suppliers of goods and services, ## its costs.” of which 93% are based in Chile. Antofagasta plc Annual Report 202290 ### Fuel and lubricants Fuel and lubricants represent approximately 11% of our production costs and are used mainly by mine haulage trucks. Improving fuel efficiency remains a priority, with the amount of fuel consumed per tonne of material mined being a key measure. Variations in the oil price affect not only the price of fuel but also shipping rates for supplies and products, and the cost of items such as tyres and conveyor belts, which contain oil-based products. In June 2022 the oil price, which is the main input for fuels, increased to levels above $100 per barrel, partly due to supply constraints arising from the war in Ukraine and partly due to the recovery in consumption as COVID-19 restrictions were lifted around the world. Year-on-year, the WTI oil price has increased from an average of $68 per barrel in 2021 to $94 per barrel in 2022. However, prices decreased in the second half of 2022 stabilising at around $80 per barrel by the end of the year. ### Explosives The price of explosives continued the upward trend observed in 2021, in line with the ammonia price which was highly affected by the increase in gas prices and supply constraints related to the war in Ukraine. In 2022 explosives prices increased on average by around 55% compared to the previous year. At Centinela, we increased our use of non-fuel-based explosives in certain areas of the mine to reduce carbon emissions and contain costs. We are evaluating the feasibility of HyEx, a project to produce green ammonia in northern Chile, led by energy multinational Engie and a Chilean explosives Company. ### Grinding balls and mill liners Steel is used in the grinding balls and mill liners which account for approximately 8% of a concentrator plant's costs and 2% of the Group's production costs. Steel prices showed an upward trend during the first half of 2022 (although averages prices were lower than in 2021) and grinding balls and liner prices also rose during 2022 before weakening towards the end of the year. Throughout 2022 we have implemented circular economy initiatives focused on steel recycling to mitigate rising costs and reduce carbon emissions. ### Sulphuric acid Sulphuric acid is one of the main inputs for the SX/EW leaching process used to produce copper cathodes and in 2022 it accounted for approximately 9% of the Group's production costs. Centinela, Antucoya and Zaldivar use a total of approximately 1.5 million tonnes of sulphuric acid per year, mainly contracted under one-year agreements to secure supply. During 2022, the acid price was about $250 per tonne in Chile, an increase of over two times compared to 2021. The spot price had an upward trend throughout the first half of the year, reaching prices of $280 per tonne. From August 2022 the price weakened, ending the year at around $150 per tonne. The high price of acid has had a significant impact on our SX-EW operations, where it accounts for about 23% of production costs. ### Exchange rate The Chilean peso/US dollar exchange rate generally has a strong correlation with the copper price as copper exports generate over 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 2022 the copper price weakened and the US dollar strengthened, largely explained by increases in interest rates by the Federal Bank in the US in response to high inflation. The Chilean peso weakened 1.3% over the US dollar, closing the year at CLP856/$1, in part explained by the copper price decrease, offset by a better political environment in Chile than the previous year. ![img-15.jpeg](img-15.jpeg) Antofagasta plc Annual Report 2022 91 Strategic Report / Operating review continued # Operating excellence and innovation **Innovation is one of our five strategic pillars, designed to create and add value across the Group by enabling the progression and fulfilment of our strategic priorities.** Our innovation programme has two key objectives. The first is to improve and achieve the full potential of our operations by seeking new ways of using best-in-class digital technology. We are doing this through the integration of data with advanced analytics and by improving operational performance with automation and robotics. The second is a longer-term objective; to enable business growth and to develop the next generation of mining practices, including game-changing process technology and the reduction of our environmental footprint. Operating excellence drives our Competitiveness strategic pillar by embedding a continuous improvement culture in the Group to raise the full potential of our assets and our people. ## Operating excellence During 2022, our operating excellence strategy focused on achieving the maximum theoretical capacities of our production processes using our Full Potential 2.0 programme. Full Potential 2.0 is a methodology that allows the systematic and standardised identification of bottlenecks in our production processes. It seeks to maximise the capture value of our mining operations through an indicator, OEE (Overall Equipment Efficiency), that measures the overall efficiency of equipment and processes. This process has allowed us to identify the main gaps and opportunities for process improvement at our operations, as well as indicating initiatives that are key to creating value. The most important of these are the use of continuous improvement methodologies and advanced analytics to improve data-driven decision-making. To sustain these improvements, we also deploy Lean practices throughout the organisation to ensure that the value of the improvements achieved is locked in. ## Data analytics During 2022, Data & Advanced Analytics focused on three main work areas: growing our Data Governance programme by adding five new Data Domains (corporate areas) and deepening skills in older domains (operations); stabilising and strengthening our Data Platform – data lake – to support current and new analytics use cases; and automating business intelligence (BI) tools, dashboards and reports. ## Operational innovation Our open innovation model is effective in enabling our employees, contractors and external parties such as suppliers to understand our main operational challenges. They can propose their own ideas and solutions through the online collaborative platform Innovaminerals and at supplier Pitch Days. During 2022 we hosted 12 Pitch Days aiming to solve 12 operational challenges in collaboration with our ecosystems. ## Cost and Competitiveness Programme 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 2022, we achieved benefits of $124 million, equivalent to $7.0c/lb for the year. The benefits were mainly achieved through higher utilisation of our processing facilities, such as at Centinela where the concentrator operated at 4% above design capacity and at Antucoya, which achieved record throughput for the year. Also, the consumption rates for some key inputs were improved through enhanced operational practices and the use of data analytics. These initiatives were especially beneficial this year, partially offsetting the impact of lower production and increased industry-wide input prices. For 2023, the target is to achieve at least $60 million of further savings. ## New ways to operate Our digital roadmap comprises transformational strategic programmes that draw on the adoption of new technologies to improve productivity and safety. This helps us maintain or improve our competitive position through continual productivity improvements that both optimise margins and advance our growth projects and innovations portfolio. ## Integrated Remote Operations Centre (IROC) Centinela's Integrated Remote Operations Centre (IROC) in the city of Antofagasta went fully operational during 2022 and Los Pelambres' IROC in Santiago was completed at the end of the year. These projects allow not only remote operations and improved process control, but better decision-making and greater efficiency and productivity from the mine to the port. ## Autonomous systems The increasing use of autonomous equipment at Los Pelambres and at Centinela's Esperanza Sur pit continued during the year. Los Pelambres has successfully deployed five autonomous production drill rigs, three electric and two diesel, which have significantly improved productivity and safety. Meanwhile, at Centinela's Esperanza Sur pit, we completed the commissioning of our new autonomous fleet, with the 11 autonomous trucks and two autonomous production drills performing as planned. ## Next generation in mining technologies We continue to advance the development and validation of new technologies that could enable new growth and mining practices, through the achievement of better and more sustainable mining as shown by the examples below. ## Cuprochlor®-T – our patented primary sulphide leaching technology The Cuprochlor®-T patent was granted in Chile in 2022 and after the successful completion of the industrial-scale trial at Centinela new tests have been started using primary sulphides from our other operations. The pre-feasibility study and preparation for a semi-industrial heap at Zaldívar is underway and we expect to complete the study by the end of 2023. The technology is incorporated as an option in our mine planning for the long-term development of the mineral resources at our operations and we expect its use to be phased in over the coming years. ## Green hydrogen In 2022 the prototype of the Hydra project, installed in the Esperanza pit at Centinela, completed its six-week trial to test the behaviour of hydrogen fuel cells in the demanding environmental conditions of the mine (particularly with regard to altitude and dust). If successful, hydrogen could replace diesel as the fuel for large mining equipment. 92 Antofagasta plc Annual Report 2022 ## AGILE DECISIONS ASSISTANT (ADA) SMART PLS LOS PELAMBRES CENTINELA During 2022, Los Pelambres started using an advanced analytics tool Smart PLS is software that uses Artificial Intelligence algorithms that provides situational awareness for integrated operations. Based to optimise decision making and operational leach processes in on real time data architecture, key process indicators (mine to port) order to maximise copper recoveries. The online platform helps are continuously monitored in the IROC, allowing operational constraints the operating team to use control charts, irrigation simulations to be quickly detected and solved. The tool was developed in-house and and automatic reportability, to track and optimise acid and water we are in process of designing and building an updated version with consumption, increase productivity and enable intelligent irrigation additional features and an improved user experience. based on expert judgement. We are currently working on the implementation of this technology at our Tesoro plant. ## IMPROVED HEAP LEACH RECOVERY HEAP PERFORMANCE OPTIMISATION ## ENABLED BY DATA ANALYSIS ZALDÍVAR We implemented multivariable data analysis at Zaldívar during 2022, ANTUCOYA using machine learning algorithms to identify the most important During 2022, multivariable data analysis was developed to identify variables that impact recoveries. The analysis showed that, among other the key variables and improve recoveries in the heap leach process. variables, the most important variable is the height of the heap which This project allowed zones in the heap to be identified that required has a significant impact on recoveries given the variability of the ground permeability improvement, increasing ore recovery by over 3%. level below the heap and the difference in height of each strip. This multivariable analysis allows us to identify the heap conditions and ## SPENT ORE BEHAVIOUR PREDICTOR optimise recoveries. ANTUCOYA During 2022, a machine learning module was developed to predict ## CATHODE CLEANING the behaviour of spent ore and to prevent delays in the mining process ZALDÍVAR by anticipating changes in the fluidity of the spent ore. The innovation project “Cathode Cleaning with Wax” was implemented during 2022, removing wax in the cathode harvesting process via an innovation where “edge covers” were installed, not only allowing the adequate isolation of the material but also increasing our workers’ safety, saving up to 20% of costs and improving the quality of the cathodes. Antofagasta plc Annual Report 2022 93 Strategic Report / Financial review ## Robust results in a year of transition Financial review for the year ended 31 December 2022 Year ended 31.12.2022 Year ended 31.12.2021 Before Exceptional Before Exceptional exceptional items items Total exceptional items Items Total $m $m $m $m $m $m Revenue 5,862.0 – 5,862.0 7,470.1 – 7,470.1 EBITDA (including share of EBITDA from associates and joint ventures) 2,929.7 – 2,929.7 4,836.2 – 4,836.2 Total operating costs (4,227.7) – (4,227.7) (3,891.1) (177.6) (4,068.7) Operating profit from subsidiaries 1,634.3 – 1,634.3 3,579.0 (177.6) 3,401.4 Net share of results from associates and joint ventures 48.1 – 48.1 59.7 – 59.7 Gain on disposal of investment in joint venture – 944.7 944.7 – – – Operating profit from subsidiaries, and total profit from associates and joint ventures 1,682.4 944.7 2,627.1 3,638.7 (177.6) 3,461.1 Net finance expense (68.2) – (68.2) 16.0 – 16.0 Profit before tax 1,614.2 944.7 2,558.9 3,654.7 (177.6) 3,477.1 Income tax expense (603.6) – (603.6) (1,332.9) 90.6 (1,242.3) Profit from continuing operations 1,010.6 944.7 1,955.3 2,321.8 (87.0) 2,234.8 Profit for the year 1,010.6 944.7 1,955.3 2,321.8 (87.0) 2,234.8 Attributable to: Non-controlling interests 422.3 – 422.3 917.4 27.2 944.6 Profit/loss attributable to the owners of the parent 588.3 944.7 1,533.0 1,404.4 (114.2) 1,290.2 Basic earnings per share cents cents cents cents cents cents From continuing operations 59.7 95.8 155.5 142.5 (11.6) 130.9 The profit for the financial year attributable to the owners of the parent (including exceptional items) increased from $1,290.2 million in 2021 to $1,533.0 million in the current year. Excluding exceptional items, the profit attributable to the owners of the parent decreased by $816.1 million to $588.3 million. The full reconciliation between 2021 and 2022, including exceptional items, is as follows: (1,608.1)1,404.4114.2 1,290.2 495.1 588.3 729.3 (336.6) (11.6) (84.2) – 2021 – 2022 expenses Decrease in | | parent in 2021 | | | | | | | | parent in 2022 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2021 (excluding | costs (excluding | | | 2022 (excluding | | | | | Profit attributable | | exceptional items) | exceptional items) | exceptional items) | exceptional items) | exceptional items) | Exceptional items | Profit attributable | | expense (excluding to the owners of the Decrease in revenue to the owners of the Less: exceptional items Profit attributable to the owners of the parent in Increase in net finance Decrease in income tax Profit attributable to the owners of the parent in Decrease in net share of joint ventures (excluding non-controlling interests Increase in total operating profit from associates and 1,533.0944.7 Antofagasta plc Annual Report 202294 Revenue Realised copper prices are determined by comparing revenue (after The $1,608.1 million decrease in revenue from $7,470.1 million in 2021 adding back treatment and refining charges for concentrate sales) with to $5,862.0 million in the current year reflected the following factors: sales volumes in the period. Realised copper prices differ from market prices mainly because, in line with industry practice, concentrate and (799.4)7,470.1 cathode sales agreements generally provide for provisional pricing at the time of shipment with final pricing based on the average market price in (704.5) future periods (normally around one month after delivery to the (3.8) (122.5) customer in the case of cathode sales and four months after delivery 25.9 (27.2) 23.4 5,862.0 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 | | | | | price | | | | | | | | | Treatment and refining charges (TC/RCs) for copper concentrate | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | in 2021 | | volumes | | | | | revenue | | revenue | | | in 2022 | | | Revenue | | | | | | | | | | | Transport | Revenue | | | | | | | | Increase in | | | Increase in | | | Increase in | | increased by $3.8 million to $155.8 million in 2022, compared with | | | Decrease in | copper sales | Decrease in | | | | | molybdenum | | Decrease in | | | | | | | | | | | treatment and | | | | silver revenue | | | | | | | | realised copper | | | refining charges | | | | | division revenue | | $152.0 million in 2021 reflecting higher average TC/RC rates, offset | Decrease in gold by the decrease in concentrate sales volumes at Los Pelambres Revenue from the Mining division and Centinela. Revenue from the Mining division decreased by $1,631.5 million, or 22%, With sales of concentrates at Los Pelambres and Centinela, which are to $5,668.6 million, compared with $7,300.1 million in 2021. The sold to smelters and roasting plants for further processing into fully decrease reflected a $1,507.7 million reduction in copper sales and refined metal, the price of the concentrate invoiced to the customer a $123.8 million decrease in by-product revenue. reflects the market value of the fully refined metal less a “treatment and refining charge” (TC/RC) deduction, to reflect the lower value of this Revenue from copper sales partially processed material compared with the fully refined metal. Revenue from copper concentrate and copper cathode sales decreased For accounting purposes, the revenue amount is the invoiced amount, by $1,507.7 million, or 24%, to $4,905.5 million, compared with $6,413.2 which is the market value of fully refined metal less the treatment and million in 2021. The decrease reflected the impact of $799.4 million from refining charges. Under the standard industry definition of cash costs, lower sales volumes, $704.5 million from lower realised prices and treatment and refining charges are regarded as an expense and part $3.8 million from higher treatment and refining charges. of the total cash cost figure. (i) Copper volumes Accordingly, the increase in these charges has had a negative impact Copper sales volumes reflected within revenue decreased by 12.2% on revenue in the year. from 681,000 tonnes in 2021 to 598,100 tonnes in 2022, decreasing revenue by $799.4 million. This decrease was due to lower copper sales Revenue from molybdenum, gold and other by-product sales volumes at Los Pelambres (53,300 tonnes decrease) as a result of its Revenue from by-product sales at Los Pelambres and Centinela relate decreased production due to the concentrate pipeline issue and water mainly to molybdenum and gold and, to a lesser extent, silver. Revenue shortage, and lower sales volumes at Centinela (30,000 tonnes from by-products decreased by $123.8 million or 14.0% to $763.1 million decrease) due to decreased production volumes reflecting expected in 2022, compared with $886.9 million in 2021. lower ore grades. Revenue from gold sales (net of treatment and refining charges) was (ii) Realised copper price $313.9 million (2021 – $436.4 million), a decrease of $122.5 million The average realised copper price decreased by 12% to $3.84/lb in which reflected a decrease in volumes slightly offset by a higher 2022 (2021 – $4.37/lb), resulting in a $704.5 million decrease in realised price. Gold sales volumes decreased by 28.6% from 244,700 revenue. The decrease in the realised price reflected the lower LME ounces in 2021 to 174,700 ounces in 2022 as the gold grades, which average market price, which fell by 5% to $4.00/lb in 2022 (2021 – are often correlated to copper grades, decreased, as did recoveries at $4.23/lb), and a negative provisional pricing adjustment of $169.7 million. Centinela. The realised gold price was $1,801/oz in 2022 compared The provisional pricing adjustment mainly reflected the decrease in the with $1,788/oz in 2021, reflecting the average market price for 2022 year-end mark-to-market copper price to $3.80/lb at 31 December of $1,800/oz (2021 – $1,799/oz) and a positive provisional pricing 2022, compared with $4.42/lb at 31 December 2021. In addition, during adjustment of $3.5 million. 2022 there was no impact in respect of commodity hedging instruments Revenue from molybdenum sales (net of roasting charges) was as no hedges were in place during the year, whereas the prior year $392.3 million (2021 – $366.4 million), an increase of $25.9 million. revenue included a $126.8 million negative impact in respect of hedging The increase was due to the higher realised price of $20.8/lb instruments which matured during 2021. (2021 – $17.4/lb), partially offset by decreased sales volumes of 9,200 tonnes (2021 – 10,400 tonnes). Revenue from silver sales decreased by $27.2 million to $56.9 million (2021 – $84.1 million). The decrease was due to lower sales volumes of 2.7 million ounces (2021 – 3.4 million ounces) and the lower realised silver price of $21.2/oz (2021 – $24.9/oz). Antofagasta plc Annual Report 2022 95 Strategic Report / Financial review continued Revenue from the Transport division Operating costs (excluding depreciation, amortisation and loss Revenue from the Transport division (FCAB) increased by $23.4 million on disposals) at the Transport division or 13.8% to $193.4 million (2021 – $170.0 million), mainly due to Operating costs (excluding depreciation, amortisation and loss on increased volumes and better pricing in some contracts. disposals) at the Transport division increased by $12.8 million to $119.1 million (2021 – $106.3 million), mainly due to an increase in the price of Total operating costs (excluding exceptional items) diesel used for locomotives and trucks as well as the impact of the The $336.6 million increase in total operating costs (excluding higher inflation rate on labour, material and contractor costs. exceptional items) from $3,891.1 million in 2021 to $4,227.7 million in the current year reflected the following factors: Depreciation, amortisation and disposals (excluding impairments) 12.8(0.5)9.86.4252.8 55.3 The expense for depreciation, amortisation and loss on disposals 3,891.1 increased by $55.3 million from $1,087.9 million in 2021 to $1,143.2 million. This increase is mainly due to higher amortisation of IFRIC 20 stripping costs at Centinela, offset by the impact of depreciation deferred in inventory, also largely at Centinela. Operating profit from subsidiaries As a result of the above factors, operating profit from subsidiaries decreased by $1,935.7 million or 54.1% in 2022 to $1,634.3 million (2021 – $3,579.0 million). | | items) | | | | | | | | costs | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | (excluding | | mine-site | | expenses | | | | Transport | | | | | (excluding | | | | exceptional | Increase in | Increase in | | Increase in | | Decrease in | Increase in | | Increase in | | | exceptional | | | costs in 2021 | | | | | | | | | | depreciation, | | | | Share of results from associates and joint ventures | | | | | | | | | | | | | | Total operating costs in 2022 | | | | | | operating costs | | | | exploration and evaluation costs | corporate costs | | | | | | | | | | | | closure provision | and other mining | | | | | division operating | | amortisation and loss on disposals | | | The Group’s share of results from associates and joint ventures was | a profit of $48.1 million in 2022, compared with $59.7 million in 2021. Operating costs (excluding depreciation, amortisation, loss on disposals and impairments) at the Mining division EBITDA Operating costs (excluding depreciation, amortisation, loss on disposals EBITDA (earnings before interest, tax, depreciation and amortisation, and impairments) at the Mining division increased by $268.5 million to and impairments) decreased by $1,906.5 million or 39.4% to $2,929.7 $2,965.4 million in 2022, an increase of 10.0%. Of this increase, $252.8 million (2021 – $4,836.2 million). EBITDA includes the Group’s million was attributable to higher mine-site operating costs. This proportional share of EBITDA from associates and joint ventures. increase in mine-site costs reflected higher key input prices and general EBITDA from the Mining division decreased by 40.2% from $4,768.0 inflation, partly offset by the impact of the decreased sales volumes, the million in 2021 to $2,849.7 million this year. This reflected the lower weaker Chilean peso and cost savings from the Group’s Cost and revenue and higher mine-site costs explained above, and to a lesser Competitiveness Programme. extent a lower EBITDA from associates and joint ventures. On a unit cost basis, weighted average cash costs excluding by-product EBITDA at the Transport division increased by $11.8 million to $80.0 credits (which for accounting purposes are part of revenue) and million in 2022 (2021 – $68.2 million), reflecting the higher revenue treatment and refining charges for concentrates (which are also part of and slightly increased EBITDA from associates and joint ventures, offset revenue for accounting purposes), increased from $1.68/lb in 2021 to by higher operating costs, mainly due to inflation and the increased $2.05/lb in 2022. price of diesel. The Cost and Competitiveness Programme was implemented to reduce Commodity price and exchange rate sensitivities the Group’s cost base and improve its competitiveness within the The following sensitivities show the estimated approximate impact industry. During 2022 the programme achieved benefits of $124.0 on EBITDA for 2022 of a 10% movement in the average copper, million in the Mining division, of which $88.0 million reflected cost molybdenum and gold prices and a 10% movement in the average savings and $36.0 million reflected the value of productivity US dollar/Chilean peso exchange rate. improvements. Of the $88.0 million of cost savings, $55.9 million related to Los Pelambres, Centinela and Antucoya, and therefore impacted the Group’s operating costs, and $32.1 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 $6.4 million. Exploration and evaluation costs increased by $9.8 million to $113.0 million (2021 – $103.2 million), reflecting increased exploration expenditure principally in respect of the Cachorro and Encierro projects, and also increased expenditure on geotechnical drilling at Los 4,227.7 Pelambres, partly offset by lower costs at Twin Metals. Corporate costs decreased by $0.5 million. Antofagasta plc Annual Report 202296 items) Total operating The impact of the movement in the average commodity prices reflects the estimated impact on the relevant revenues during 2022, 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. Impact of a 10% movement in | | | Average market | the commodity price/exchange | | | | --- | --- | --- | --- | --- | --- | | | commodity price/average | | rate on EBITDA for the year | | | | exchange rate during the year | | | | ended 31.12.22 | | | | | ended 31.12.22 | | | $m | Copper price $4.00/lb 566 Molybdenum price $18.7/lb 38 Gold price $1,800/oz 31 US dollar/Chilean peso exchange rate 872 153 Net finance (expense)/income Net finance expense of $68.2 million reflected a variance of $84.2 million compared with the $16.0 million gain in 2021. Year ended 31.12.22 Year ended 31.12.21 $m $m Interest income 40.2 5.0 Interest expense (78.6) (63.4) Other finance items (29.8) 74.4 Net finance expense (68.2) 16.0 Interest income increased from $5.0 million in 2021 to $40.2 million in 2022, mainly due to an increase in average interest rates. Interest expense increased from $63.4 million in 2021 to $78.6 million in 2022, again mainly reflecting an increase in average interest rates, partially offset by the decrease in the average relevant borrowing balances (after taking account of borrowings where the interest is capitalised). Other finance items were a net loss of $29.8 million, compared with a net gain of $74.4 million in 2021, a variance of $104.2 million. This was largely due to the foreign exchange impact of the retranslation of Chilean peso denominated assets and liabilities, which resulted in a $12.8 million loss in 2022 compared with a $49.7 million gain in 2021. In addition, there was a negative year-on-year variance of $41.7 million related to the discounting of long-term provisions, largely driven by the increase in discount rates in 2021 resulting in a decrease in the provision balances and a corresponding credit recognised in other finance items in the prior year. Profit before tax As a result of the factors set out above, profit before tax decreased by 26.4% to $2,558.9 million (2021 – $3,477.1 million). Antofagasta plc Annual Report 2022 97 Strategic Report / Financial review continued Income tax expense The tax charge for 2022 excluding exceptional items decreased by $729.3 million to $603.6 million (2021 – $1,332.9 million) and the effective tax rate for the year was 37.4% (2021 – 36.5%). Including exceptional items, the tax charge for 2022 was $603.6 million and the effective tax rate was 23.6%. The following table provides a numerical reconciliation between the accounting profit before tax multiplied by the applicable statutory tax rate and the total tax expense (including both current and deferred tax). | | Year ended | | Year ended | | Year ended | | Year ended | | --- | --- | --- | --- | --- | --- | --- | --- | | excluding exceptional items | | including exceptional items | | excluding exceptional items | | including exceptional items | | | | 31.12.2022 | | 31.12.2022 | | 31.12.2021 | | 31.12.2021 | $m % $m % $m % $m % Profit before tax 1,614.2 2,558.9 3,654.7 3,477.1 Profit before tax multiplied by Chilean corporate tax rate of 27% (435.9) 27.0 (691.0) 27.0 (986.8) 27.0 (938.8) 27.0 Mining Tax (royalty) (94.5) 5.8 (94.5) 3.7 (243.8) 6.7 (243.8) 7.0 Deduction of mining royalty as an allowable expense in determination of first category tax 23.1 (1.4) 23.1 (0.9) 67.8 (1.9) 67.8 (1.9) Items not deductible from first category tax (33.9) 2.1 (33.9) 1.3 (31.6) 0.9 (31.6) 0.9 Adjustment in respect of prior years (2.6) 0.1 (2.6) 0.1 (12.1) 0.3 (12.1) 0.3 Withholding tax (73.0) 4.6 (73.0) 2.9 (195.0) 5.3 (195.0) 5.6 Tax effect of share of profit of associates and joint ventures 13.0 (0.8) 13.0 (0.5) 16.1 (0.4) 16.1 (0.5) Impact of unrecognised tax losses on current tax 0.2 – 0.2 – 52.5 (1.4) 52.5 (1.5) Recognition of previously unrecognised tax losses on deferred tax – – – – – – 90.6 (2.6) Provision against carrying value of assets – – – – – – (48.0) 1.4 Gain on disposal of investment in joint venture – – 255.1 (10.0) – – – – Tax expense and effective tax rate for the year ended (603.6) 37.4 (603.6) 23.6 (1,332.9) 36.5 (1.242.3) 35.7 The effective tax rate excluding exceptional items of 37.4% varied from Disposal of investment in Tethyan joint venture the statutory rate principally due to the mining tax (royalty) (net impact of On 15 December 2022 Antofagasta entered into definitive agreements to $71.4 million/4.4% including the deduction of the mining tax (royalty) as exit its interest in the Tethyan joint venture. As a result, Antofagasta has an allowable expense in the determination of first category tax), the recognised a gain on disposal of its investment in the joint venture as at withholding tax relating to the remittance of profits from Chile (impact 15 December 2022 of $944.7 million. Full details of the agreements and of $73.0 million/4.6%), items not deductible for Chilean corporate tax gain on disposal are set out in Note 17 to the financial statements. purposes, principally the funding of expenses outside of Chile (impact of 2021 – Impairment of Twin Metals’ assets $33.9 million/2.1%) and adjustments in respect of prior years (impact of In 2021 an impairment was recognised in respect of the $177.6 million of $2.6 million/0.1%), partly offset by the impact of the recognition of the intangible assets and property, plant and equipment relating to the Twin Group’s share of profit from associates and joint ventures, which are Metals project. included in the Group’s profit before tax net of their respective tax charges (impact of $13.0 million/0.8%). 2021 – Recognition of previously unrecognised deferred tax assets At 31 December 2021, the Group recognised $90.6 million of previously The impact of the exceptional items on the effective tax rate including unrecognised deferred tax assets relating to tax losses available for exceptional items was $255.1 million/10.0%. Further details of the offset against future profits, reflecting the improved actual and forecast exceptional gain on the disposal of the Group’s investment in the Tethyan profitability of the relevant Group entity (Antucoya). joint venture, including relevant tax aspects, are set out in Note 17 to the financial statements. Non-controlling interests Profit for 2022 attributable to non-controlling interests (excluding Exceptional items exceptional items) was $422.3 million, compared with $917.4 million Exceptional items are material items of income and expense which are in 2021, a decrease of $495.1 million. This reflected the decrease in non-regular or non-operating and typically non-cash, including earnings analysed above. impairments and profits or losses on disposals. The tax effect of items presented as exceptional is also classified as exceptional, as are material deferred tax adjustments that relate to more than one reporting period. The classification of these types of items as exceptional is considered to be useful as it provides an indication of the underlying earnings generated by the ongoing businesses of the Group. Antofagasta plc Annual Report 202298 ## Earnings per share | | Year ended 31.12.22 $ cents | Year ended 31.12.21 $ cents | | --- | --- | --- | | Underlying earnings per share (excluding exceptional items) | 59.7 | 142.5 | | Earnings per share (exceptional items) | 95.8 | (11.6) | | **Earnings per share (including exceptional items)** | **155.5** | **130.9** | 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 $588.3 million compared with $1,404.4 million in 2021, giving underlying earnings per share of 59.7 cents per share (2021 – 142.5 cents per share). The profit attributable to equity shareholders (including exceptional items) was $1,533.0 million, resulting in earnings per share of 155.5 cents per share (2021 – 130.9 cents per share). ## Dividends Dividends per share proposed in relation to the period are as follows: | | Year ended 31.12.22 $ cents | Year ended 31.12.21 $ cents | | --- | --- | --- | | Ordinary dividends: | | | | Interim | 9.2 | 23.6 | | Final | 50.5 | 118.9 | | **Total dividends to ordinary shareholders** | **59.7** | **142.5** | 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 2022 of 50.5 cents per ordinary share, which amounts to $497.6 million and will be paid on 12 May 2023 to shareholders on the share register at the close of business on 21 April 2023. The Board declared an interim dividend for the first half of 2022 of 9.2 cents per ordinary share, which amounted to $90.7 million. This gives total dividends proposed in relation to 2022 (including the interim dividend) of 59.7 cents per share or $588.3 million in total (2021 – 142.5 cents per ordinary share or $1,404.8 million in total) equivalent to a payout ratio of 100% of underlying earnings. ## Capital expenditure Capital expenditure increased by $101.7 million from $1,777.5 million in 2021 to $1,879.2 million in the current year, mainly due to increased sustaining capex at Centinela, Los Pelambres and Antucoya, increased mine development at Los Pelambres and Centinela, offset by lower expenditure on the Esperanza Sur pit at Centinela and the Los Pelambres Expansion project. 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 2022 there were no derivative financial instruments in place (2021 – nil). Antofagasta plc Annual Report 2022 99 Strategic Report / Financial review continued # **Cash flows** The key features of the cash flow statement are summarised in the following table. | | Year ended 31.12.22 $m | Year ended 31.12.21 $m | | --- | --- | --- | | **Cash flows from continuing operations** | **2,738.3** | 4,507.7 | | Income tax paid | (787.1) | (776.9) | | Net interest paid | (45.2) | (53.3) | | Capital contributions and loans to associates | – | (33.5) | | Purchases of property, plant and equipment | (1,879.2) | (1,773.0) | | Acquisition of mining properties | – | (4.5) | | Acquisition of equity investments | (66.5) | – | | Dividends paid to equity holders of the Company | (1,262.9) | (710.8) | | Dividends paid to non-controlling interests | (80.0) | (604.5) | | Dividends from associates and joint ventures | 50.0 | 142.5 | | Other items | 0.1 | 1.4 | | Changes in net debt relating to cash flows | (1,332.5) | 695.1 | | Other non-cash movements | (70.4) | (73.8) | | Effects of changes in foreign exchange rates | (23.4) | 1.2 | | Movement in net debt in the period | (1,426.3) | 622.5 | | Net cash/(net debt) at the beginning of the year | 540.5 | (82.0) | | **(Net debt)/net cash at the end of the year** | **(885.8)** | 540.5 | Cash flows from continuing operations were $2,738.3 million in 2022 compared with $4,507.7 million in 2021. This reflected EBITDA from subsidiaries for the year of $2,777.5 million (2021 – $4,666.9 million) adjusted for the negative impact of a net working capital increase of $12.7 million (2021 – working capital increase of $140.2 million) and a non-cash decrease in provisions of $26.5 million (2021 – decrease of $19.0 million). The working capital increase in 2022 was mainly due to the increase of work in progress inventories in the Mining division and an increase in finished goods inventories at Centinela, partially offset by a decrease in receivables, reflecting the lower average mark-to-market price at 31 December 2022 of $3.80/lb (31 December 2021 – $4.42/lb) and lower sales volumes towards the end of the current period compared with the end of 2021, and an increase in creditors. The net cash outflow in respect of tax in 2022 was $787.1 million (2021 – $776.9 million). This amount differs from the current tax charge in the consolidated income statement (including exceptional items) of $448.8 million (2021 – $1,035.5 million) mainly because cash tax payments for corporate tax and the mining tax include the settlement of outstanding balances in respect of the previous year’s tax charge of $332.2 million (2021 – $30.9 million), withholding tax payments of $24.5 million, payments on account for the current year based on the prior year’s profit levels of $435.6 million, as well as the recovery of $5.1 million relating to prior years. Contributions and loans to associates and joint ventures were nil (2021 – $33.5 million, relating to Hornitos and Tethyan). Capital expenditure in 2022 was $1,879.2 million compared with $1,777.5 million in 2021. This included expenditure of $889.7 million at Los Pelambres (2021 – $880.4 million), $857.0 million at Centinela (2021 – $791.8 million), $66.9 million at Antucoya (2021 – $49.6 million), $10.8 million at the corporate centre (2021 – $24.4 million) and $54.8 million at the Transport division (2021 – $31.3 million). The increase in sustaining capex at Centinela and Los Pelambres, and increased mine development at Los Pelambres and Centinela, was partially offset by less expenditure on the Esperanza Sur pit at Centinela. Dividends paid to equity holders of the Company were $1,262.9 million (2021 – $710.8 million) of which $1,172.1 million related to the payment of the previous year’s final dividend and $90.7 million to the interim dividend declared in respect of the current year. Dividends paid by subsidiaries to non-controlling shareholders were $80.0 million (2021 – $604.5 million). Dividends received from associates and joint ventures were $50.0 million for 2022 (2021 – $142.5 million). # **Financial position** | | At 31.12.22 $m | At 31.12.21 $m | | --- | --- | --- | | Cash, cash equivalents and liquid investments | 2,391.2 | 3,713.1 | | Total borrowings | (3,277.0) | (3,172.6) | | **(Net debt)/net cash at the end of the period** | **(885.8)** | 540.5 | 100 Antofagasta plc Annual Report 2022 At 31 December 2022, the Group had combined cash, cash equivalents and liquid investments of $2,391.2 million (31 December 2021 – $3,713.1 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 $1,990.9 million (31 December 2021 – $3,299.9 million). Total Group borrowings at 31 December 2022 were $3,277.0 million, an increase of $104.4 million on the prior year (31 December 2021 – $3,172.6 million). The increase was mainly due to the $488.5 million from the issue of the new corporate bond, $327.4 million of additional drawdown for the Los Pelambres Expansion project, a $50.0 million refinancing of the senior loan at Antucoya and $51.3 million of new finance leases, partly offset by a $686.1 million repayment of the senior loans at Corporate ($500.0 million), Centinela ($111.1 million), Los Pelambres ($50.0 million) and Antucoya ($25.0 million), $35.0 million repayment of Antucoya’s short term loan and $19.6 million of subordinated debt repayment by Antucoya. Excluding the non-controlling interest share in each partly-owned operation, the Group’s attributable share of the borrowings was $2,449.7 million (31 December 2021 – $2,409.6 million). These movements resulted in net debt at 31 December 2022 of $885.8 million (31 December 2021 – net cash $540.5 million). Excluding the non-controlling interest share in each partly-owned operation, the Group had an attributable net debt position of $458.7 million (31 December 2021 – net cash $890.3 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 and decisions relating to permitting. 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 **Tony Jensen** Senior Independent Director Antofagasta plc Annual Report 2022 101 Corporate Governance # Governance Applying the Code in 2022 104 Board leadership and Company purpose Chairman's introduction 106 Senior Independent Director's introduction 108 Group corporate governance overview 110 Board activities 112 Stakeholder engagement 114 Workforce engagement 116 Division of responsibilities Directors' biographies 118 Board balance and skills 120 Roles in the boardroom 121 Executive Committee biographies 122 Introduction to the Committees 124 Composition, succession and evaluation Nomination and Governance Committee report 125 Board effectiveness 128 Audit, risk and internal control Audit and Risk Committee report 129 Sustainability and Stakeholder Management Committee report 137 Projects Committee report 140 Remuneration Remuneration and Talent Management Committee Chair's introduction 142 Remuneration at a glance 146 2023 Directors' and CEO's Remuneration Policy 148 2022 Directors' and CEO's Remuneration Report 155 Remuneration and Talent Management Committee report 163 Implementation of the Directors' and CEO's remuneration policy in 2023 165 Directors' Report 168 Statement of Directors' responsibilities 171 "As the impacts of the COVID-19 pandemic began to fade, I was delighted that our entire Board was able to meet in person for the first time since early 2020." "Our experiences during the pandemic have allowed us to become more flexible while at the same time reminding us of the importance of human connection and the opportunity to share ideas and perspectives." Jean-Paul Lukaic Chairman 102 Antofagasta plc Annual Report 2022 103103Antofagasta plc Annual Report 2022 Corporate Governance / Applying the Code in 2022 # How we apply the Code ## 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 2022. 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 2022 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 is best 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 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 were invited by the then Senior Independent Director to discuss this subject ahead of the 2020 AGM when Code Provision 19 was introduced and unanimously expressed 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 118 and further details of the role of the Senior Independent Director are set out on pages 108 and 121. The UK Corporate Governance Code is available on the Financial Reporting Council website at www.frc.org.uk. ## How the Code principles were applied in 2022 ### 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 18-21 and 112. - 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 24-35. - The Board ensures effective engagement with, and encourages participation from, shareholders and other stakeholders to ensure that its responsibilities are met – pages 38-73, 106, 108, 114-115, 121, 143 and 164. - 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 36, 48-50, 116-117, 134-135 and 142-167. - The Board considers the matters set out in section 172 of the Companies Act 2006 in Board discussions and decision-making – pages 38-73. Detailed examples can be found on pages 114-115. #### 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 121. - There is a clear division of responsibilities between the Board and the executive leadership of the Company's business – pages 110, 120 and 121. - 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 111 and 126. #### 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 121. - The Board considers that the Chairman demonstrates objective judgement and promotes a culture of openness, healthy challenge and debate – pages 104 and 108. - 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 111, 121 and 126. 104 Antofagasta plc Annual Report 2022 # Non-Executive Directors - The Non-Executive Directors provide constructive challenge and strategic guidance, offer perspectives across various specialisms and hold management to account – pages 118-120. # Commitment - All Directors have confirmed that they are able to allocate enough time to meet the expectations of their role – page 118. - Directors do not undertake additional external appointments without the Board’s prior approval – page 118. - Time commitment is considered during Board effectiveness reviews and when electing and re-electing Directors – pages 125-128. - A review of Directors’ external directorships is carried out annually – pages 109 and 169. # Information and support - The Board is provided with appropriate information in a form and of a quality to discharge its duties – page 111. - The Board has access to independent professional advice and to the advice and services of the Company Secretary – pages 121 and 126. - The Board is regularly updated on the Group’s performance between scheduled Board meetings – page 111. # Composition, succession and evaluation # Composition of the Board and Committees - The Board has 10 Directors, comprising a Non-Executive Chairman and nine other Non-Executive Directors, six of whom were independent in 2022 and five of whom continue to be independent as at the date of this Annual Report – pages 118-121. - 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 – pages 118-119. - The Board and its Committees comprise Directors with the requisite combination of skills, experience and knowledge to fulfil their roles – pages 118-121. - 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 – pages 120 and 125-127. # 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 – pages 125-127. - Independent external search consultancies are used for appointments to the Board – pages 126-127. - An effective succession plan is maintained for Board and senior management appointments – pages 126-127 and 164. - 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 126. # Development - New Directors receive a thorough induction upon joining the Board – pages 126 and 128. - 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 126. # Evaluation - Annual evaluation of the Board considers composition, diversity and how effectively members work together to achieve objectives – page 128. - Individual evaluation is part of the annual Board evaluation and assesses whether each Director continues to contribute effectively – page 128. - An externally facilitated Board and Committee effectiveness review was conducted in 2022 – page 128. # 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 – pages 129-136. # 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 171. # 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 24-35 and 134-136. # 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 – pages 118-120. # 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 is being submitted for approval 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 142-143, 148-154 and 161. - 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 142-166. # Procedure - The Board has a formal and transparent procedure for developing policy on executive remuneration and determining Director and senior management remuneration – pages 142-167. - 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 142-148. Antofagasta plc Annual Report 2022 105 Corporate Governance / Chairman's introduction # Our governance framework ![img-16.jpeg](img-16.jpeg) Jean-Paul Luksic ## Dear shareholders Welcome to the Corporate Governance section of our 2022 Annual Report. My introductory letter to this Annual Report sets out some of the Group's key challenges and achievements in 2022 and my reflections on the outlook for 2023, and illustrates the Board's ability to navigate these scenarios supported by our strong and effective governance framework. As the impacts of the COVID-19 pandemic began to fade, I was delighted that our entire Board was able to meet in person for the first time since early 2020. Our experiences during the pandemic have allowed us to become more flexible while at the same time reminding us of the importance of human connection and the opportunity to share ideas and perspectives. ## Shareholder engagement We were pleased to welcome shareholders to our first hybrid AGM in 2022, opening the doors for shareholders to attend in person while also allowing shareholders to engage from afar. Once again, we will be hosting a hybrid AGM in 2023. As the year progressed, our Senior Independent Director and Chair of the Audit and Risk Committee, Tony Jensen, and our Chair of the Remuneration and Talent Management Committee, Francisca Castro, met with shareholders and proxy voting agencies in a mix of in-person and virtual meetings. They discussed our approach to corporate governance and Antofagasta's 2023 remuneration policy, which is being tabled for shareholder approval at the 2023 AGM, while providing shareholders and proxy advisers with the opportunity to share their perspectives. Details of these meetings can be found in the Senior Independent Director's introduction on page 108 and the Remuneration and Talent Management Committee Chair's introduction on page 142. ## Diversity and Inclusion An issue that was discussed with shareholders, which is important to our Board, was diversity—particularly gender diversity. Since 2014, half of our appointments to the Board have been female and women now make up 30% of our Board. However, we are actively searching for another female director to join our board and aim to meet the UK's new targets on gender diversity, while also continuing to build a pipeline of female talent across the organisation. Further information on the Board's diversity policy can be found in the Nomination and Governance Committee Report on page 126. ## Audit and Risk Management The Board, led by the Audit and Risk Committee, conducted a tender process for the appointment of the Group's auditor in 2024. This was done a year earlier than is required by regulation to give time to ensure a smooth transition of audit and non-audit services, and in anticipation of the implementation of UK audit and corporate governance reforms. 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. ## Our Commitment to Environmental, Social and Governance (ESG) Issues Our efforts on climate change are an integral part of our ESG 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. ESG considerations are integrated into our business and we are working with our suppliers, not just in the application of our safety standards, but also of our sustainability practices. In 2022, Antofagasta set new standards for sustainability for our suppliers, and by doing so we plan to gradually align their ESG capabilities with our own. Whether it's lowering emissions or ensuring that mining becomes more diverse and inclusive, such partnerships will deliver progress in areas that are fundamental to our purpose: "Developing Mining for a Better Future". ## Stakeholder engagement With the pandemic subsiding, our Directors have been making site visits to at least one of our operations, including to the desalination plant and concentrator plant expansion projects, and to Los Pelambres' tailings dams. The insights from these visits were shared at board and committee meetings, deepening the directors' understanding of our activities. ## External Board evaluation We always seek for continuous improvement in all that we do, and the Board and its governance are no exception. During 2022, Clare Chalmers conducted an external comprehensive independent Board evaluation. Clare attended several Board and Committee meetings, interviewed Directors, senior management and key external advisers, and travelled to Chile to deliver her findings to the Board. Further details regarding Clare's evaluation can be found on page 128. ## Board changes and succession planning Vivianne Blantot has served on our Board with dedication for nine years as of 27 March 2023. Although she has agreed to continue as a Director, she is no longer considered to be "independent" according to the Board's tenure policy, which aligns with the Code's guidance. As a result, she has rotated off the Nomination and Governance Committee and Remuneration and Talent Management Committee, and has been appointed to the Projects Committee. She has also agreed to continue serving as Chair of the Sustainability and Stakeholder Management Committee. To fill these vacancies, Francisca Castro has joined the Nomination and Governance Committee and Eugenia Parot has joined the Remuneration and Talent Management Committee. 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. I'd like to thank you all for your ongoing engagement and look forward to having the opportunity to meet with you at our AGM. Jean-Paul Luksic Chairman 106 Antofagasta plc Annual Report 2022 appointments to the Board. This matrix includes sustainability ### BOARD OVERSIGHT OF CLIMATE-RELATED experience (which includes competence on climate related issues) ### RISKS AND OPPORTUNITIES as a key skill and the Board ensures that there is an adequate depth The Board has ultimate responsibility for the Group’s climate-related of climate change knowledge and awareness on the Board when objectives and strategy. The Board’s oversight of climate-related risks making new appointments. In 2022, the Board’s externally and opportunities is fully integrated within our governance structures. facilitated evaluation also included a review of the Board’s ESG This responsibility and oversight includes specific climate related focus, including in relation to climate related matters. activities such as approving the Group’s Climate Change Strategy, • As shown on pages 129-136, the Audit and Risk Committee assists approving emission reduction targets, monitoring implementation the Board in overseeing the Group’s risk management framework, of the Climate Change Strategy and approving the Company’s TCFD including climate change risk. disclosures. This also includes more general approval and oversight • As shown on pages 137-139, the Sustainability and Stakeholder responsibilities which incorporate climate-related risks and Management Committee considers climate change when opportunities such as reviewing and approving the Group’s capital reviewing and monitoring relevant strategy, policies and allocation framework which includes criteria relating to climate performance matters. In 2022, this included reviewing a progress resilience and an internal carbon price, reviewing and approving the report on the development of an inventory of Scope 3 emissions Group’s base and development case models which include adjustments and next steps and reviewing the water situation in the Choapa for physical and transition risks associated with climate change, Valley after 13 years of lower-than-normal rainfall and Los approving the Group’s annual budget, reviewing the Group’s principal Pelambres’ water strategy. and emerging risks which include climate change and approving KPIs • As shown on pages 140-141, the Projects Committee considers in the Group’s remuneration structures that reward our employees for climate change when reviewing and monitoring the Group’s major progress in relation to achieving the Group’s climate-related objectives. capital projects. In 2022, this included reviewing ore transport In 2022, the Board dedicated part of its annual strategy session to alternatives for the Polo Sur project taking into account the Group’s reviewing the financial implications of climate change on the Group. internal carbon price. The Board is supported by all of the Board’s committees in ensuring • As shown on pages 142-167, the Remuneration and Talent that climate-related considerations are fully integrated into the Board’s Management Committee monitors executives and managers’ short- governance structures. For example: and long-term incentive plans which include KPIs relating to climate change such as progress towards the achievement of climate • As shown on pages 125-128, the Nomination and Governance targets, alignment to the Copper Mark and implementation of the Committee considers the Board’s skills matrix when making Climate Change Strategy. Antofagasta plc Annual Report 2022 107 Corporate Governance / Senior Independent Director’s introduction ## Board balance ## “The feedback we received ## from our meetings ## with shareholders was ## reported to the Board ## and is reflected in the ## decisions that have been ## made in the preparation Tony Jensen ## Senior Independent Director of this Corporate ## Governance report.” Q. What are your responsibilities as Senior relating to the Board’s diversity policy and progress towards Independent Director? achieving the new targets set out in the Listing Rules, the Board’s I have three main responsibilities as Senior Independent Director. oversight of ESG matters, including carbon emission reduction First, I must be available to shareholders to ensure that the Board targets, Directors’ time commitments and the role of the considers their views, interests and concerns. Second, I provide controlling shareholder in the Board’s governance arrangements. support to the Chairman, ranging from advice on corporate The feedback we received from these meetings was reported to governance matters to presiding over potential conflict of interest the Board and is reflected in the decisions that have been made decisions by the Board, and making sure that the views of the in the preparation of this Corporate Governance report. other Directors are conveyed to him and reflected in Board Q. What impact does the controlling shareholding have on discussions. Third, I lead the annual review of the Chairman’s Company decisions? performance and oversee the closure of any gaps identified by Members of the Luksic family have been involved in the Company internal and externally facilitated reviews of the Board’s and the for over 40 years. During this time, the Company has Committees’ performance. demonstrated an excellent track record in terms of safety, I discharge these responsibilities through close co-ordination with operational performance and financial strength. the Chairman, Directors, Company Secretary and the management I have discussed the role of the controlling shareholders with other team. I met various shareholders and proxy advisers during the shareholders. The widely held view is that the substantial year to understand their views of the Company, Board and senior controlling interest is positive, with shareholders satisfied that management team. This has helped me ensure that the Chairman, the interests of the controlling shareholders are aligned with the Board and the management team receive a balanced view theirs. They have expressed their appreciation of the members of issues that are relevant and important for our shareholders. of the Luksic family who serve on the Board, commending their Q. Why did you meet with shareholders and proxy advisers long-term vision, which has contributed to the Company’s prudent during the year and what issues did you discuss? operating, financial and growth strategy, as well as its stability. As Senior Independent Director and Chair of the Audit and Risk Shareholder support is, of course, conditional on the strength of Committee, I aim to meet with shareholders every one to two the current corporate governance framework, which rigorously years to gain a first-hand understanding of the subjects that protects the interests of all shareholders equally. matter to them. This year, I joined the Chair of our Remuneration I, and all the other Independent Directors, guard our independence and Talent Management Committee, Francisca Castro, in inviting and place a strong emphasis on maintaining this governance and the Company’s 15 largest investors as well as the Investment protection regime. We are supported and encouraged by the other Association, Glass Lewis and Institutional Shareholder Services Directors who – like the Independent Directors – bring their own to meet with us to discuss Corporate Governance matters, the perspectives and opinions and are committed to the long-term Company’s proposed 2023 remuneration policy (as explained in sustainable success of the Company. more detail on pages 149-154) and to allow shareholders to raise any concerns that they would like to discuss without the presence The controlling shareholders and the members of the Luksic of the senior management team. The feedback we received was family who serve on the Board (including the Chairman), actively very positive and no major concerns were raised. Apart from the support this framework and encourage the Independent Directors discussion of remuneration-related matters, which is outlined in to provide the independent input and challenge that, we are more detail by Francisca on page 149, we engaged in discussions convinced, proves invaluable in Board decision-making. Tony Jensen Antofagasta plc Annual Report 2022108 Senior Independent Director Relationship agreement transactions between the Company and the controlling shareholders The E. Abaroa Foundation is a controlling shareholder of the Company or their related entities to a committee of Directors independent from for the purposes of the Listing Rules and certain other shareholders the controlling shareholders, to assess whether the Company should of the Company (including Aureberg Establishment) are also treated enter into such transactions and, if so, to oversee the negotiation as controlling shareholders. Details of the Company’s substantial process. In most cases, transactions of this nature will also be subject shareholders are set out on page 169. to independent review by third-party shareholders in each of the Group’s mining operations. In 2014, the Company entered into relationship agreements with each controlling shareholder, which contain the mandatory independence Any proposed related party transaction over $40 million, whether provisions required by the Listing Rules. The Company complied with or not in the ordinary course of business, is also tabled for Board and, so far as the Directors are aware, each controlling shareholder approval. Any Director with a potential conflict or connection with and its associates (including Metalinvest Establishment and Kupferberg the related party does not take part in the decision on that transaction. Establishment) also complied with the mandatory independence Related party governance in practice provisions throughout 2022. There are several checks and balances to ensure that there is full Related party transactions transparency in the handling of related party transactions by the Certain related party transactions outside the ordinary course of Board. The following diagram summarises the approach taken to business must be subject to independent assessment and approval. identify and manage related party transactions and actual or potential The Company has for many years presented all such related party conflicts of interest. ### Identifying Directors’ interests Process How this is managed Responsibility MONITORING If a Director has an interest in any other entity, the Board will normally Directors OF DIRECTORS’ consider that interest under its arrangements for authorising potential INTERESTS conflicts of interest under section 175 of the Companies Act. See page 169 for more information. ### Managing related party transactions Process How this is managed Responsibility PROPOSED Ongoing monitoring of Directors’ interests and the Company’s related parties Company Secretary, TRANSACTION provides information to determine whether a related party approval is senior management and required for a proposed transaction. the Executive Committee CONTRACT NEGOTIATION The Executive Committee seeks to ensure that the best possible terms are Senior management and AND VERIFICATION achieved for a proposed transaction and that, where appropriate or the Executive Committee necessary, they are verified by industry benchmarking reports or independent and, if involving a third-party valuation or assessment. controlling shareholder, Independent Directors 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. APPROVAL BY Potential related party transactions outside the ordinary course of Independent Directors INDEPENDENT DIRECTORS 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. Antofagasta plc Annual Report 2022 109 Corporate Governance / Group corporate governance overview ## Our governance framework ### Antofagasta plc Board Key responsibilities The Board’s role is to promote the long-term, sustainable success of the • Culture Company, generating value for shareholders and contributing to wider • Strategy and management society. The Board has established the Company’s purpose, values, • Governance strategy and risk appetite and monitors the culture of the Group • Shareholder engagement as well as its performance against defined measures. • Internal controls, risk management and compliance The schedule of matters reserved for the Board is available on the • Financial and performance reporting Company’s website at antofagasta.co.uk. • Structure and capital • Approving material transactions ### Board Committees Key responsibilities The Board has delegated authority to these Committees to perform The key responsibilities of each Committee and their focus areas certain activities as set out in their terms of reference, which are for 2022 are set out on page 124. 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. The Board is assisted in discharging its responsibilities by five Board Committees: SUSTAINABILITY NOMINATION AUDIT REMUNERATION AND AND STAKEHOLDER PROJECTS AND GOVERNANCE AND RISK TALENT MANAGEMENT MANAGEMENT ### CEO and Executive Committee The Board has delegated day-to-day responsibility for implementing the Mr Arriagada chairs the Executive Committee. Group’s strategy and fostering the corresponding organisational culture The Executive Committee reviews significant matters and approves to the Company’s CEO, Iván Arriagada. expenditure within designated authority levels. Mr Arriagada is not a Director of the Company but is invited to attend all The Executive Committee leads the annual budgeting and planning Board and Committee meetings and is supported by the members of the processes, monitors the performance of the Group’s operations and Executive Committee, each of whom has executive responsibility for his investments, evaluates risk and establishes internal controls, promoting or her respective function. the sharing of best practices across the Group. ### Subcommittees of the Executive Committee Members of the Executive Committee also sit on the boards of to the market and for managing its disclosure in line with the Group’s the Group’s operating companies and report on the activities of those current Disclosure Procedures Manual. companies to the Board, Mr Arriagada and the Executive Committee. The Executive Committee is assisted in its responsibilities by The Board has delegated to the Disclosure Committee primary internal the following Subcommittees: responsibility for identifying information that may need to be disclosed OPERATING WATER, ENERGY BUSINESS CLIMATE PROJECT DISCLOSURE ETHICS PERFORMANCE & EMISSIONS DEVELOPMENT CHANGE STEERING REVIEW MANAGEMENT Antofagasta plc Annual Report 2022110 ### Board and Board Committee information flows ### 01 ### 06 Chairman and Senior Further information Independent Director provided between agree agenda with meetings the CEO | | | 05 | | | 02 | | --- | --- | --- | --- | --- | --- | | | Action lists prepared | | Papers circulated | | | | and updated as key actions | | | in advance of | | | | | are implemented | | | meetings | | | | | 04 | | 03 | | --- | --- | --- | --- | --- | | | Minutes prepared, | | Board and Committee | | | circulated and approved | | | | meetings | 01 04 Chairman and Senior Independent Director agree agenda Minutes prepared, circulated and approved with the CEO and the Company Secretary The Company Secretary minutes all Board and Committee The Chairman and Senior Independent Director, in consultation with meetings, which are circulated and reviewed by the Board and the CEO and the Company Secretary, maintain an agenda of standing management, updated as necessary and tabled for approval topics to be considered by the Board and Committees each year, at the following meeting. which is then supplemented, during the year, with agreed key topics 05 and events requiring consideration. Action lists prepared and updated as key actions Ad hoc Board and Committee meetings are also called, as appropriate. are implemented 02 The Board and each Committee maintain an action list that is reviewed at the beginning of each meeting to ensure that Directors’ Papers circulated in advance of meetings enquiries and concerns are clearly identified and timely addressed. Materials are sent to Board and Committee members a week in advance of each meeting. 06 Presentations include a summary sheet setting out the objective, Further information provided between meetings background, proposal, justification, risk analysis and next steps Between Board meetings, Directors receive flash reports associated with that topic. Materials include the CEO’s report, with monthly and year-to-date production and financial results, which is an open and candid summary of his views on evolving ensuring that the Board is regularly updated on the Group’s progress. strategic challenges, changes in risk assessments and emerging Where appropriate, Directors may receive general information issues, as well as the management report which includes detailed on the commodity markets and additional reports highlighting key information on the Group’s performance against key safety, health, developments in the Group’s exploration, projects, business environmental, community, financial, workforce, project development and innovation activities. development and organisational culture indicators. The Group’s management team, led by Iván Arriagada, performs 03 an essential role in ensuring that the Board has the information Board and Committee meetings required to make effective decisions, reporting in real time on the Board and Committee meetings include regular in-camera sessions implementation of the Group’s strategy and the Company’s without management present to allow Directors to set expectations performance. 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. Antofagasta plc Annual Report 2022 111 Corporate Governance / Board activities # Board oversight in 2022 During 2022, 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. ## 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 2022 have furthered the Group's strategy. Read more about our strategic framework on P18 ### Culture - Monitored operational and projects performance and its link with the Group's culture, particularly concerning safety and health. - 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. - Reviewed requests by Directors to undertake additional external appointments. - Oversaw the 2022 externally facilitated Board and Committees effectiveness review. - Monitored feedback from investors and proxy agencies regarding the Group's corporate governance arrangements. - Reviewed the results of perception studies carried out within certain stakeholder groups in Chile. - Reviewed and approved updates to the Group's Sustainability and Human Rights policies and reviewed new Water and Energy policies. - Reviewed and approved the Company's 2022 Modern Slavery Act statement. ### Internal controls, risk management and compliance - Reviewed the risk management system's maturity level. - 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 four 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 as part of the Base Case and Development Case review. - Attested to the effectiveness of the Group's risk management and internal control systems. - Reviewed actions planned for 2023 to prepare for the UK Government's audit and corporate governance reforms. - Reviewed half-yearly compliance reports. - Reviewed results of the Group's whistleblowing processes. - Reviewed Internal Audit department's progress and 2023 audit plan. - Selected a new External Auditor following a tender process for the 2024 audit onwards. ### Financial and performance reporting - Approved the Group's 2021 full-year and 2022 half-year results and corresponding announcements. - Recommended and declared dividends paid to shareholders during 2022. - Reviewed and approved going concern and viability statements and conducted stress tests related to a potential future resilience statement. 112 Antofagasta plc Annual Report 2022 ### 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 safety and health 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. • Monitored COVID-19 protocols aimed at protecting the Group’s workforce and • Continued to monitor independent reviews of the safety of the Group’s tailings storage neighbouring communities and the lifting of restrictions during the year. facilities and assessed it versus industry best practice and the ICMM’s GISTM standard. • Reviewed and monitored the Group’s safety and health performance. • Continued to monitor progress of local community interactions at Los Pelambres, • Reviewed the Group’s compliance with its environmental commitments. including the execution of agreements with communities following the rupture of the 1 concentrate pipeline. • Monitored the Group’s implementation of its Climate Change Strategy. • Assessed progress in the renewal of key water extraction and mining permits at Zaldívar. • Reviewed the implementation of water conservation and efficiency measures at Los Pelambres, addressing the water shortage generated by a 13-year drought. • Monitored the achievement of Copper Mark certification for all the Group’s mining operations. ### 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 • Monitored progress on the implementation of the Group’s Diversity and Inclusion to facilitate flexible on-site, home-based and hybrid working arrangements, with the Strategy and approved a more ambitious goal for women to represent 30% of the goal of creating a more flexible, adaptable and resilient organisation. workforce by the end of 2025. • Reviewed the results of employee engagement surveys conducted during the year. • Monitored labour relations at the Group’s mining and transport operations and • Reviewed the annual talent management exercise, including succession plans for reviewed results of collective bargaining negotiations, which were completed Directors, the CEO and the Executive Committee. in an atmosphere of respect and trust. • Reviewed employee performance, including the Company’s short-term and long-term • Monitored progress of the annual Human Resources plan. incentive scorecards. • Reviewed development of the 2023 Directors’ and CEO’s Remuneration Policy, to be submitted for shareholder approval 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, • Reviewed and approved the Group’s copper concentrate and copper cathode sales strategy. including estimated future savings. 1 • Reviewed the progress of proposed tax legislation in Chile which would affect the Group. • Approved key procurement and sales contracts. • Monitored proposed labour legislation. • Reviewed and monitored the Group’s operating and financial performance. • Reviewed actions taken to enhance cyber security. ### 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 • Reviewed Centinela’s In-pit tailings deposition project which aims to allow for tailings 1 and data analytics initiatives. deposition in pits no longer in use. • Reviewed progress on the implementation of the Group’s digital transformation • Reviewed the potential application of the Group’s proprietary Cuprochlor®-T primary programme. sulphide leach technology. • Monitored progress on Centinela’s and Los Pelambres’ integrated remote operations centres. ### Growth We have a portfolio of growth projects that allows us to remain competitive by developing sustainable operations over the long term. • Reviewed progress on the Los Pelambres Expansion project, Los Pelambres ore • Approved the Group’s exit from the Reko Diq project in Pakistan. transport system project, Zaldívar’s Chloride Leach project and Centinela’s Esperanza • Reviewed progress on the Group’s material Environmental Impact Assessments. Sur project. • Reviewed and approved the acquisition and divestment of mining properties in Chile. • Reviewed progress on Phase 2 of the Los Pelambres Expansion project and approved • Reviewed and approved the Group’s long-term price assumptions and commercial a funds advance to address critical path items including key acquisitions and parameters. engineering. • Reviewed and approved the base case and development case for the Group’s assets. • Reviewed progress on the Centinela Second Concentrator project and postponed • Reviewed the Group’s strategic growth plan (PEC), which is a mine production decision on whether to proceed with the project until there is greater clarity on mining planning exercise without restrictions, aiming to quantify the potential to transform royalty, tax and constitutional reform. the Group’s mineral resources into ore reserves. • Monitored progress on the feasibility study for the Polo Sur project. • Reviewed and approved the Group’s 2023 budget. • Reviewed Zaldívar’s permitting strategy to extend its water extraction permit beyond 2025. • Reviewed the Group’s mineral resources and ore reserves statement. • Monitored actions to advance the Twin Metals Minnesota project and reorganised its team. • Reviewed business development and exploration opportunities and activities. 1. 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 114-115. Antofagasta plc Annual Report 2022 113 Corporate Governance / Stakeholder engagement # Engaging with stakeholders to make decisions for a better future **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 38-73.** **Further details on the Board's workforce engagement mechanisms are set out on pages 116-117.** Three principal 2022 Board decisions are explained 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. **Board oversight of mining royalty and tax reform bills in Chile** The total tax rate for Chilean companies that remit profits to shareholders abroad is 35%, which comprises a standard corporate tax at 27%, which is payable as profits are earned, and a withholding tax payable on profits distributed out of Chile (at 35% less the corporate tax already paid). There is also a separate mining tax (royalty) of 5-14% of operating profits, with the rate based on the operating margin. In 2022, the Group incurred $604 million of taxes and invested $57 million in social projects and programmes to benefit communities that live around our operations. The Group's underlying net earnings after taxes and before exceptional items amounted to $588 million. The effective tax rate (ETR) paid by the Group was 37.4% which compares with the ETRs calculated by the IMF for a typical Chilean mining company of 38% and for mining OECD countries of 39%. In May 2021, the lower house of Congress approved a proposal to establish a new mining royalty to fund social needs, which was sent to the Senate for consideration. The lower house's royalty proposal included *ad-valorem* (revenue-based) and profit-based royalties that would have increased the ETR to over 75% at copper prices of over $4.00/lb, which would be the highest rate in the world, by a significant margin. In July 2022, the Chilean government submitted to congress a proposed tax reform bill that aimed to increase tax collections by 4.3% of GDP when fully implemented. As part of this tax reform bill, the Government submitted a revised mining royalty reform proposal which superseded the proposal by the lower house. Although the resulting ETR of the proposed royalty was lower than the original proposal, it was still a very significant increase on current rates. In October 2022, the Government adjusted its mining royalty proposal, reflecting in part the concerns raised by several stakeholders with respect to the impact on Chile's competitiveness. The new proposal included a flat 1% *ad valorem* tax rate on copper sales for large copper mines, a new variable scale profits royalty, between 8% and 26% according to the operating margin of mining companies, and other structural changes. Under this proposal, ETRs would range from 45% to 50%, continuing to reduce Chile's competitiveness in comparison with other mining countries. All the Group's operating companies have tax invariability agreements; Los Pelambres and Zaldívar's agreements run until the end of 2023, Centinela's agreement runs until 2029 (2031 for Encuentro Oxides) and Antucoya's agreement runs until 2030. Any impact from a change in the mining royalty would take effect after the end of the invariability period. *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 progress of this proposed legislation considering the likely consequences of the 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. In considering the implications of the proposed royalty on these stakeholders, the Board considered and had regard to the interests of key stakeholders, noting that: - Between 2013 and 2019, approximately 80% of copper industry revenue was used to pay salaries, and for services, materials and supplies to operations and projects. The remaining 20% covered, in almost equal parts, dividends paid to shareholders and taxes. - Mining has a multiplier effect. For every $100 generated by mining an additional $78 is generated in other sectors of the economy. - 90% of Chile's copper is produced by 22 companies. Five are in the third quartile of the industry's cost curve and 12 are in the fourth quartile, and so their profitability is more sensitive to copper price variations. In 2019, the 12 companies in the fourth quartile had losses of approximately $700 million after having spent over $4.8 billion in salaries, and purchases of goods and services. - The Board authorised management to engage with stakeholders on the potential impacts of these proposals in all relevant forums to allow for this to be considered in the development of this legislation. This included the presentation to Congress of the impacts on stakeholders, as relayed to management in discussions with them. - During 2022, the Board decided to postpone the decision on whether to proceed with the investment in Centinela's Second Concentrator project until there is sufficient clarity on the tax outcomes of the ongoing discussions on the mining royalty and tax reform bills, and the rewriting of the Chilean constitution. This is expected to be by the end of 2023. - The Board will continue to closely monitor the situation and oversee engagement with stakeholders to ensure that the impacts of these proposals are fully understood by Congress. - The Board will continue to take the potential impacts on stakeholders into account in its broader decision-making. 114 Antofagasta plc Annual Report 2022 Los Pelambres – Concentrate Pipeline Incident How the Board considered, and had regard to, the interests of key On 31 May, Los Pelambres detected a leak near Llimpo in the stakeholders and the requirements of section 172(1) underground pipeline that transports concentrate from the concentrator In making this decision the Board took into consideration that: plant at the mine site to the port at Los Vilos. The pipeline was • The Company’s purpose of ‘Developing Mining for a Better Future’ immediately shut down and the location of the leak identified. The that has led to its pursuit of innovative tailings disposal alternatives pipeline was repaired, and operation of the pipeline resumed on 26 that align with modern mining practices and are sustainable, and June. A full assessment of the incident found no material or irreversible focus on ameliorating or removing environmental challenges. environmental impact and the pipeline was approved for reopening by • The project is expected to deliver additional reductions on the impact the relevant local regulator. of Centinela’s operations on communities and the environment. This is A review was carried out to incorporate improved safety measures into achieved by leveraging Centinela’s thickened tailings process, which pipeline operations ahead of the complete replacement of the pipeline, already increases the recovery of process water and lowers the which is expected to be completed in 2025. The Company, together with emissions of particulate matter due to the saline layer that forms on the local authorities, successfully engaged with members of the local the surface of the tailings. In addition, in-pit deposition enables the communities who were concerned about the safety of the pipeline. reuse of previously condemned areas for waste disposal, leading to significant environmental benefits and a reduction in Centinela’s How the Board considered, and had regard to, the interests of key overall footprint. stakeholders and the requirements of section 172(1) • Maintaining a reputation for high standards of business conduct is The Board called a special meeting following the incident to understand essential, particularly given the technical, environmental and risk its potential impact on the environment and on Los Pelambres’ management advantages associated with the project. Notably, the stakeholders including local communities, suppliers, customers, project offers flexibility to the operation while enabling a larger government authorities, regulators, and shareholders. The Board deposition of tailings at a lower unit cost. This approach optimises continued to monitor the response to the incident in subsequent Centinela’s value by utilising more cost-effective disposition methods scheduled meetings and the Board’s Sustainability and Stakeholder earlier in the mine’s life, deferring higher capital expenditure on Management Committee reviewed Los Pelambres’ community relations raising the height of the current tailings storage facilities’ walls. model in the context of the incident. • The project will deliver economic benefits for shareholders In monitoring Los Pelambres’ response to the incident, the Board had and reduce the environmental impact of the operations’ regard to: tailings disposal. • The impact of the incident on local communities and the environment, Overall, the Board believes that this project is in the best monitoring communications and dialogue with government authorities interests of Centinela and its stakeholders, and will and the communities, the independent investigation into the incident, continue to carefully consider all factors before and the containment and rehabilitation of the area of the spill and making a final investment decision in 2024. repair of the pipeline. • Customers due to the rescheduling of shipments. An agreement was reached with the Llimpo community addressing their operational concerns related to the incident and for Los Pelambres to provide support for the development of local infrastructure. Since the incident, Los Pelambres has been applying a precautionary conservative safety factor to ensure the safe operation of the pipeline. Following the incident, several Directors visited the Choapa Valley with members of the management team to understand the broader context of the incident and to hear first-hand from employees, contractors and the communities their perspectives on the impact that Los Pelambres has on them. Centinela’s in-pit tailings project Centinela is considering using its disused open pits for the storage of thickened tailings from its concentrator plant as an alternative to traditional tailings disposal methods. The project has the potential to meet Centinela’s tailings management needs for a minimum of 9 to 10 years and potentially for the life of the concentrator plant. The Board approved the project’s Commitment Phase in 2022, with a potential investment decision to be made by 2024. Antofagasta plc Annual Report 2022 115 Corporate Governance / Workforce engagement ## Fostering a collaborative dialogue ## and working environment The Group’s workforce comprises 31,126 people. Approximately ### Mining is a long-term business whose 23% of the workforce are Group employees and 77% are employees ### timescales often run into decades. Our of contractor companies. More than 99% of the Group’s employees ### relationships with our stakeholders are central are in Chile and approximately 72% come from communities in the Antofagasta and Coquimbo Regions, where the Group’s operating ### to our long-term success and to our purpose companies are located. ### of developing mining for a better future. Approximately 77% of the Group’s employees are unionised. This ### The Group’s governance structures ensure number is close to 100% at the operator level. The Group maintains ### that the views and interests of stakeholders, ongoing dialogue with labour unions and key issues are raised with ### including our employees and contractors, and discussed by the Remuneration and Talent Management Committee and the Board. ### are discussed in the boardroom and ### considered as part of the Board’s deliberations. The Group maintains strong relations with its workforce, based on trust, continuous dialogue and favourable working conditions. The Board has ## 99% ## 31,126 carefully considered and reviewed the mechanisms in place to allow the Board to understand the views of the Group’s workforce. Ultimately, the Live in Chile Total workforce 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 ## 72% panel or a designated non-executive director). The Board considers that adopting any of these mechanisms would interfere with the effective, Live in the Antofagasta structured and formal combination of mechanisms already in place. and Coquimbo Regions Antofagasta plc Annual Report 2022116 The Group has established control mechanisms to ensure that • More targeted and specific ad hoc workforce surveys are conducted contractor companies’, whose employees are often members of their and/or focus groups are convened throughout the year in relation to own labour unions, meet the Group’s standards and guidelines on specific areas of interest such as new Ways of Working, employee labour, environmental and social and ethical matters and adopt good wellbeing and the Diversity and Inclusion Strategy. The results of practices with regard to safe workplaces and the quality of employment. these activities are overseen by the Executive Committee and Contractors' employees receive the same minimum protections as the reported to the Remuneration and Talent Management Committee Group’s employees under Chilean labour law and the Group requires and the Board. contractors to pay their employees ethical wages – which as of • The workforce is engaged in the design and development of December 2022 were 55% higher than the Chilean legal minimum – programmes that impact the Company’s culture or have a significant and to provide other basic benefits, including life and health insurance. impact on working conditions. Recent examples include the Diversity These protections are reinforced through bank guarantees and and Inclusion programme and the flexible work arrangements. contractors are subject to regular audits by independent third parties to • The Group’s workforce is encouraged to report any concerns to the ensure full compliance with these standards. Ethics Committee through the confidential whistleblowing hotline. Below is a selection of the workforce engagement mechanisms that the Reports may be made anonymously. All reports are investigated and Board currently has in place: reported to the Audit and Risk Committee and the Board. • Directors visit the Group’s operations individually or in small groups During 2022, the Board applied feedback received from the throughout the year and engage informally with the workforce. workforce to decisions related to flexible working initiatives, Impressions and views arising from these visits are reported to the the oversight of labour negotiations and the development Board and its Committees and related questions are raised with of the Group’s Diversity and Inclusion Strategy. 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 and typically form a key part of the CEO’s general update to the Board. • The CEO, Vice President of Northern Operations, Vice President of Los Pelambres, Vice President of Human Resources, and the General Managers and HR Managers of each relevant operation meet unions at least twice per 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. Additional meetings with union representatives took place during 2022, 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 during the year and the results were shared with the Remuneration and Talent Management Committee in a designation session to review the results of these surveys and also with the Board. 117Antofagasta plc Annual Report 2022 Corporate Governance / Directors’ biographies ## Members of the Board ### Biographical details for each Director are set out on the following page. 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 a significant ### number of regular and ad hoc meetings held in response to the challenges arising throughout ### the year demonstrated their commitment. | KEY TO COMMITTEES | ANTOFAGASTA PLC DIRECTORS’ BOARD MEETING ATTENDANCE | | | | | --- | --- | --- | --- | --- | | | | Number attended | | Number attended | | Nomination and Governance | Jean-Paul Luksic 13/13 | | Vivianne Blanlot 13/13 | | | Audit and Risk | Tony Jensen 13/13 | | Jorge Bande 13/13 | | | Sustainability and Stakeholder Management | Ramón Jara 13/13 | | Francisca Castro 13/13 | | | Projects | Juan Claro 11/13 | | Michael Anglin 13/13 | | | Remuneration and Talent Management | Andrónico Luksic C 11/13 | | Eugenia Parot 13/13 | | Committee Chair Chairman of the Board From left to right: Ramón Jara, Juan Claro, Vivianne Blanlot, Michael Anglin, Francisca Castro, Jean-Paul Luksic, Jorge Bande, Eugenia Parot, Andrónico Luksic C, Tony Jensen Antofagasta plc Annual Report 2022118 Current positions Jean-Paul Luksic Vivianne Blanlot Francisca Castro Chairman • Chairman of Fundación Minera Los Non-Executive Director Non-Executive Director Pelambres (charitable foundation) Independent: No Independent: No (since 27 March Independent: Yes • Director of Fundación Andrónico 2023) Appointed to the Board: 1990 Appointed to the Board: 2016 Luksic A (charitable foundation) Appointed to the Board: 2014 | Appointed Chairman: 2004 | • Member of the Advisory Council of | | Commercial engineer with over 25 | | --- | --- | --- | --- | | (Non-Executive since 2014) | Centro de Estudios Públicos, a | Economist with extensive experience | years’ experience in industry, | | | not-for-profit academic foundation in | in public and private energy, mining, | including mining, energy, finance and | Over 30 years’ experience with Chile water and environmental sectors public/private infrastructure projects Antofagasta, including responsibility • Member of the Board of the Centre of in Chile in the United States and Chile for overseeing development of the Arbitration of the Chilean Chamber of Los Pelambres and El Tesoro Previous roles Previous roles Commerce (Centinela Cathodes) mines • Executive Director of the Comisión • Strategic Business Manager • Chairman of the Chile Australia Previous roles Nacional de Medio Ambiente (Chile’s at Codelco Business Committee and Vice Environmental Agency) • General Co-ordinator of Concessions • Chairman of Consejo Minero, the Chairman of the Chile Japan Business Committee of Sociedad • Undersecretary of the Comisión at Chile’s Ministry of Public Works industry body representing the de Fomento Fabril (Chilean Industrial Nacional de Energía (Chile’s National • Various roles within Chile’s Finance largest mining companies in Chile Council) Energy Commission) Ministry and the World Bank, • CEO of the Group’s Mining division • Member of the APEC Business • Chile’s Minister of Defence Washington DC Current positions Advisory Council (ABAC) • Director of Scotiabank Chile • Member of the independent Technical • Member of the Board of Consejo • Director of Empresas CMPC SA, a Panel of Chile’s Public Works Minero pulp, paper and packaging Company Concessions Juan Claro • Non-Executive Director of Quiñenco Non-Executive Director listed in Chile Current positions | SA and Quiñenco group listed | | • Director of Instituto Chileno | | | --- | --- | --- | --- | | | Independent: No | | • Member of the Chilean | | companies Banco de Chile and | | de Administración Racional de | | | | Appointed to the Board: 2005 | | Pension Funds Risk Classification | | Sociedad Matriz SAAM SA | | Empresas (ICARE), a business think | | Committee • Member of the Board of Centro de Extensive industrial experience tank in Chile • Director of SalfaCorp SA Estudios Públicos, a not-for-profit in Chile, including an active • Member of Consejo para la academic foundation in Chile • Director of the Fraunhofer Chile role representing Chilean Transparencia (Transparency Research Foundation industrial interests nationally Council), the Chilean body responsible Tony Jensen for enforcing transparency in the • Independent Director of Conexión and internationally Non-Executive Director public sector Kimal-Lo Aguirre S.A., a power Previous roles transmission Company in Chile Independent: Yes Current position • Chairman of Energía Coyanco SA Appointed to the Board: 2020 • Director of Colbún SA, an energy Michael Anglin • Chairman of the Sociedad Company listed in Chile Mining engineer with over 35 years de Fomento Fabril (Chilean Industrial Non-Executive Director of mining experience in the United Council) Independent: Yes • Chairman of the Confederación de Jorge Bande States and Chile in operational, | | | Non-Executive Director | Appointed to the Board: 2019 | | --- | --- | --- | --- | | financial, business development | la Producción y del Comercio | | | | and management roles. | (Chilean Business Confederation) | Independent: Yes | Mining engineer with over 30 years’ | | | • Chairman of the Consejo Binacional | | experience in base metals, including | | Previous roles | | Appointed to the Board: 2014 | | | | de Negocios Chile-China (Council for | | the development, construction and | | • Director of Golden Star Resources | Bilateral Chile-China Business) | Economist with over 40 years’ | operation of large-scale mining | | Limited | | experience in the mining, energy and | | operations in the Americas. Current positions • President, CEO and Director of Royal water industries in Chile Previous roles Gold Inc • Chairman of Coca-Cola Andina SA Previous roles • Director of Melón SA and • Vice President Operations and Chief • Mine General Manager of the Cortez • Co-founder and Executive Director Operating Officer of BHP Base Metals joint venture in Nevada and in Agrosuper SA of Copper and Mining Studies CESCO, treasury, business development and a • Member of the Board of Centro de • Director of EmberClear Corp an independent not-for-profit think wide range of other operating Estudios Públicos, a not-for-profit tank focused on mining policy issues Current positions roles with Placer Dome in the USA academic foundation in Chile and Chile • Vice President of Development and • Chairman of SSR Mining Inc • Country Adviser, Goldman Sachs later Director of Codelco • Adviser to IntelliSense.io Current positions • CEO of AMP Chile • Director of Tulla Resources, Australia Andrónico Luksic C • Director of Black Hills Corporation • Adviser to the World Bank Non-Executive Director • Member of the University Advisory • Member of the Global Agenda Council Eugenia Parot Board for the South Dakota School of Independent: No for Responsible Minerals Resource Non-Executive Director Mines and Technology Management at the World Economic Appointed to the Board: 2013 Independent: Yes Forum Extensive experience across a range Ramón Jara • Director of Edelnor SA, Electroandina Appointed to the Board: 2021 of business sectors throughout Chile, Non-Executive Director SA (now E-CL SA) and Bupa Civil biochemical engineer with over Latin America and Europe Chile SA 35 years’ experience, working for Independent: No Current positions • Member of the Experts Committee leading engineering and consulting Appointed to the Board: 2003 • Chairman of Quiñenco SA for Copper Prices for Chile’s Ministry companies providing services to Lawyer with considerable legal and and Compañía Cervecerías Unidas of Finance some of the largest mining projects in commercial experience in Chile SA, and Vice Chairman of Banco Latin America in the areas of Current positions de Chile and Compañía Sudamericana Previous roles environment, sustainability and mine de Vapores SA, all of which are listed • Director of CESCO waste management. • Partner, Jara del Favero Abogados companies in the Quiñenco group • Director of NEXT Minerals SA • Director of Empresa Nacional del Previous roles • Director of Nexans SA, a Company • Professor of the International Petróleo (ENAP) • Vice President of Latin America, listed on Euronext Paris and part Postgraduate Programme in Mineral • Vice President, SONAMI (National owned by Quiñenco SA Economics at the University of Chile Regional President for South America Mining Association) and Managing Director for Chile, • Member of the International Business • Member of the Advisory Council of Leaders’ Advisory Council for the Golder Associates the School of Economics and Mayor of Shanghai; the Chairman’s Business at the University of Chile • Director on Golder’s holding International Advisory Council at the Company board and member of the Council of the Americas; the Global Audit and Finance and Investments Board of Advisors at the Council of Committees. Foreign Relations; and the Brookings • Member of the Boards of Golder Institution’s International Advisory South America, Chile, Peru and Council. Argentina. Antofagasta plc Annual Report 2022 119 Corporate Governance / Board balance and skills ## A balance of skills ## and experience ### The Board comprises ten Directors with a broad and complementary set of technical skills, ### educational and professional experience, nationalities, personalities, cultures and perspectives. Board balance 1 2 3 Independence Gender diversity Tenure Nationality Chairman Male 1-5 years Chile Independent Female 6-10 years USA Non-Independent 10+ years 1. The Board reviews the independence of Directors annually. The Board has carefully 3. The Company has met the Parker Review target and in 2022 more than half the considered the independence of all Directors and is satisfied that Jorge Bande, Board identified as being from an ethnic minority background according to the Francisca Castro, Michael Anglin, Tony Jensen and Eugenia Parot continue to be criteria in the Parker Review survey. As noted throughout this Annual Report, the independent in character and judgement and that there are no relationships or Group’s footprint is primarily in Chile, where ethnicity profiles and representation in circumstances that are likely to affect, or could appear to affect, their judgement. society differ significantly from those in the UK. Nevertheless, the Board recognises The Board is also satisfied that Vivianne Blanlot was independent throughout 2022 that the mining industry is international and therefore the Board includes several and until 27 March 2023 which was the ninth anniversary of her appointment to the Directors from outside Chile in support of its vision and strategy. Board. Further details are provided on page 121. 2. The Board’s Nomination and Governance Committee continues to work with an independent external search consultancy to identify potential female candidates who could contribute significantly to the Board in the future. Further details on the Board’s diversity policy can be found on pages 126-128. Board skills matrix 1 Independence CEO experience Mining industry experience Mining operations experience Board governance Financial Legal Executive compensation Latin American experience UK market Project management Sustainability Energy experience Government relations Communication Director Jean-Paul Luksic          Ramón Jara          Juan Claro         Andrónico Luksic C        Vivianne Blanlot          Jorge Bande             Francisca Castro          Michael Anglin          Tony Jensen              Eugenia Parot           1. 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. 7 1 Antofagasta plc Annual Report 2022120 | 3 5 3 | | --- | | 4 8 4 | | 3 2 | / Roles in the boardroom ## Board and senior management’s ## roles and responsibilities 1 ### The Group’s CEO, Iván Arriagada, is not a Director, reflecting the law and practice in Chile. ### 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. 2 Non-Executive Chairman Independent Non-Executive Directors CEO Jean-Paul Luksic Tony Jensen Iván Arriagada Leads the Board and ensures Michael Anglin Leads the implementation of the its effectiveness overall. Group’s strategy set by the Board. Jorge Bande • Promotes the highest standards of integrity, • Manages the overall operations and Francisca Castro probity and corporate governance. resources of the Group. Eugenia Parot • Sets the agenda for Board meetings • Leads the Executive Committee and Ensure that no individual or small in consultation with the Senior ensures its effectiveness in all aspects group of individuals can dominate Independent Director, CEO and of its duties. the Board’s decision-making. the Company Secretary. • Provides information and makes • Chairs meetings and ensures that there • Meet the independence criteria set out recommendations to the Board regarding 2 is adequate time for discussion of all in the UK Corporate Governance Code. the Group’s day-to-day activities and agenda items, focusing on strategic, • Have no connection with the Group or long-term plans. rather than routine, issues. any other Director which could be • Promotes a culture of openness and perceived to compromise independence. debate within the Board by facilitating • Provide a range of outside perspectives Executive Committee members constructive Board relations and to the Group and encourage robust Present proposals, recommendations the effective contribution of all Directors. debate with, and challenge of, the and information to the Board within • Oversees Director induction, Group’s executive management. their areas of responsibility. development and performance reviews. • Support the CEO in the implementation • Leads relations with shareholders, including of the Group’s strategy set by the Board. the Group’s controlling shareholders. 3 Non-Executive Directors Senior Independent Director Company Secretary Juan Claro Tony Jensen Julian Anderson Ramón Jara Provides a sounding Board for the Ensures that Directors have access Chairman and supports the Chairman to the information they need to perform Andrónico Luksic C in the delivery of his objectives their roles. 4 Vivianne Blanlot as required. • Provides a conduit between Board Provide a range of outside perspectives • Where necessary, acts as an and its Committees and a link between to the Group and encourage robust intermediary between the Chairman the Board and management. debate with, and challenge of, the and the other members of the Board • Advises the Board on corporate Group’s executive management. or the CEO. governance and supports the Board in • The Board does not consider these • Acts as an additional point of contact for applying the UK Corporate Governance Directors to be independent because shareholders, focusing on the Group’s Code and complying with the UK listing they do not meet one or more of the governance and strategy and gives regime and obligations. independence criteria set out in the shareholders an alternative means of • The division of responsibilities between 3 UK Corporate Governance Code. raising concerns other than with the the Chairman, the CEO, and the Senior • Ensure that no individual or small group Chairman or senior management. Independent Director is available on the of individuals can dominate the Board’s Company’s website at antofagasta.co.uk. decision-making. 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. 1. Chilean law prohibits CEOs of listed companies from being Directors of those 3. Ramón Jara provides advisory services to the Group. Andrónico Luksic C is the companies. The CEO and CFO are invited to attend all Board meetings. The CEO brother of Jean-Paul Luksic, the Chairman of the Company, and is Chairman of is also invited to attend all Board Committee meetings and there is regular formal Quiñenco SA and Chairman or Director of Quiñenco’s other listed subsidiaries. and informal dialogue between management and the Board. Jean-Paul Luksic is also a Non-Executive Director of Quiñenco and some of its listed 2. The Board reviews the independence of Directors annually. The Board has carefully subsidiaries. Like Antofagasta plc, Quiñenco is controlled by a foundation in which considered the independence of all Directors and is satisfied that Jorge Bande, members of the Luksic family are interested. Ramón Jara and Juan Claro have served Francisca Castro, Mike Anglin, Tony Jensen and Eugenia Parot continue to be on the Board for more than nine years from the date of their first election. independent in character and judgement and that there are no relationships or 4. Vivianne Blanlot was an independent Non-Executive Director until 27 March 2023, circumstances that are likely to affect, or could appear to affect, their judgement. the ninth anniversary of her appointment to the Board. Antofagasta plc Annual Report 2022 121 Corporate Governance / Executive Committee biographies ## Members of the Executive Committee | | 02 | 0301 | | --- | --- | --- | | 04 06 | 05 | | | 07 | 08 | 09 | | 10 | 11 | 12 | Antofagasta plc Annual Report 2022122 01 Iván Arriagada 05 Georgeanne Barceló 09 Patricio Enei CEO appointed in 2016 Vice President of Human Resources Vice President of Legal appointed in 2014 appointed in 2022 Joined the Group in 2015 Joined the Group in 2014 Joined the Group in 2021 • Commercial engineer and economist with more than • Lawyer and MBA, with over 20 years’ experience 30 years’ international experience in the mining and • Human resources specialist with a degree in Law in mining oil and gas industries and a Master’s degree in Strategic Human Resources Previous roles Management and more than 20 years’ experience Previous roles in international and national companies across a • General Counsel at Codelco • Chief Financial Officer of Codelco range of sectors, including insurance and industry • Corporate Affairs Manager at Escondida • Various positions over six years at BHP Base Metals, • Senior lawyer at BHP Billiton in Chile Previous roles including President of Pampa Norte (Spence and • Chief Legal Counsel at Collahuasi Cerro Colorado), Vice President Operations and Chief • Labour Relations Manager of Antofagasta Minerals • Lawyer at the Instituto de Normalización Previsional Financial Officer of the Base Metals division • Corporate Director of People at Bupa Chile and in private practice • Almost 15 years’ experience with Shell in Chile, the • Human Resources Vice President at Komatsu United Kingdom, Argentina and the United States Latin America 10 Andrónico Luksic L Vice President of Development 02 Mauricio Ortiz 06 Gonzalo Sánchez appointed in 2015 CFO appointed in 2020 Vice President of Sales appointed in 2004 Joined the Group in 2006 Joined the Group in 2015 Joined the Group in 1996 • Business administrator with broad mining experience • Electrical engineer with two Master of Sciences • Civil engineer with over 25 years’ experience in in sales, exploration, business development and degrees (Metals and Energy Finance and Electrical marketing and metals hedging general management Engineering) and 15 years’ experience in the energy, Previous roles mining and railway industries Previous roles • Deputy Commercial Director of Antofagasta Minerals • Corporate Manager in the Mining division Previous roles • Copper sales at Codelco • Director, Antofagasta Minerals, Toronto Office • General Manager of FCAB (Transport division) 07 Francisco Walther • Various positions at Banco de Chile • Business Development Manager of Antofagasta Vice President of Projects appointed in 2018 | Minerals | | 11 | Alan Muchnik | | --- | --- | --- | --- | | • Finance Manager at Codelco – Chuquicamata | Joined the Group in 2007 | | Vice President of Strategy | | • Business Development Principal at Rio Tinto plc, | • Mining engineer with over 25 years’ experience in | | and Innovation appointed in 2021 | | London | open pit and underground mining and engineering | | | Joined the Group in 2016 • Various operating project roles at BHP Previous roles • Civil engineer, Master’s degree in engineering 03 Mauricio Larraín and MBA • Corporate Project Manager of Antofagasta Minerals Vice President of Northern Operations • Project Director of Reko Diq Previous roles appointed in 2022 • Director of Codelco’s Chuquicamata underground • Group Innovation and Energy Manager, and Growth Joined the Group in 2017 mine project Assets, Energy and Innovation Portfolio Manager of • Civil mining engineer and Master of Sciences (Mineral • Head of Engineering for Codelco’s Ministro Antofagasta Minerals Economics) with over 25 years’ experience in mining Hales project • Several positions in strategy, planning, studies and business development over 10 years at BHP (Chile Previous roles 08 René Aguilar and the USA) Vice President of Corporate Affairs • General Manager of Los Pelambres and Sustainability appointed in 2017 12 Katharina Jenny • General Manager at Codelco’s El Teniente Division Joined the Group in 2017 General Manager – FCAB • Operations Manager at El Teniente (Transport division) appointed in 2019 • Mine Planning Corporate Manager of Codelco • Industrial psychologist with 20 years’ experience in mining, including in sustainability, safety, human Joined the Group in 2016 • Various positions at Codelco and Los Pelambres resources and corporate affairs • Mining engineer and MBA, with over 15 years’ 04 Alejandro Vásquez experience in mining Previous roles Vice President of Los Pelambres Operations appointed in 2022 • Group Head of Safety at Anglo American, London Previous roles • Vice President of Corporate Affairs and Sustainability • Safety and Health Manager at Antofagasta Minerals Joined the Group in 2022 at Codelco • Productivity and Costs Manager, and Safety Manager • Civil mining engineer with over 30 years’ • Health and Safety Director of the International at Codelco experience in mining Council on Mining and Metals (ICMM), London • Various roles at BHP, including mine planning, safety Previous roles and health and environment • 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 Antofagasta plc Annual Report 2022 123 Corporate Governance / Introduction to the Committees ## Board committees ### 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 | Focus areas for 2022 | | --- | --- | | • Corporate governance framework | • Succession planning for Board and Committee roles | | • Succession planning for the CEO and the Board | • Board Committee composition | | • Board and Committee composition | • Monitoring shareholder feedback on Governance | | • Nomination to the Board | • Board and Committee evaluation | • Board effectiveness reviews ### Audit and Risk Committee | Key responsibilities | Focus areas for 2022 | | --- | --- | | • Financial reporting | • Reviewing the Company’s half year and year-end financial results | | • External audit | • Assessing financial controls and reporting | | • Internal audit | • Monitoring risk management and compliance | | • Risk management | • Assisting the Board with updates to the Group’s risk appetite assessment | | • Internal control | • Assisting the Board with the 2024 external audit tender | • Compliance ### Sustainability and Stakeholder Management Committee Key responsibilities Focus areas for 2022 • Policies and commitments • Monitoring events at Los Pelambres following the concentrate pipeline incident • Safety and health • Overseeing measures to protect the safety and health of the Group’s workforce • Community relations • Endorsing key policies for the Group’s long-term sustainable success • Environmental and social matters • Reviewing climate change strategy implementation • Stakeholder engagement • Receiving reports on the Group’s tailings storage facilities ### Projects Committee Key responsibilities Focus areas for 2022 • Oversight of project standards, guidelines • Monitoring progress on the engineering and remaining project studies for the and best practices Centinela Second Concentrator project • Project development lifecycle matters • Monitoring progress in the execution of the Los Pelambres Expansion • Project reviews and Zaldívar Chloride Leach projects • Lessons learned from completed projects • Monitoring development of the Group’s organic growth opportunities ### Remuneration and Talent Management Committee Key responsibilities Focus areas for 2022 • Remuneration governance • Determining the application of the Group’s executive remuneration framework • Directors’ remuneration • Considering feedback from shareholders in relation to the 2022 Directors’ • Executive remuneration and CEO’s Remuneration Report and the proposed 2023 Directors’ and CEO’s Remuneration Policy • Group pay structures • Monitoring Directors’ and CEO remuneration • Talent management and succession planning for the Executive Committee • Reviewing employee engagement survey results • Employee engagement • Reviewing talent management and Executive Committee succession plans • Talent retention • Diversity and inclusion • HR Planning Find out more online antofagasta.co.uk/bc Antofagasta plc Annual Report 2022124 / Nomination and Governance Committee report / Nomination and Governance Committee report ## Maintaining an effective Board ## “The Committee helps ensure that ## the Company’s long-term interests ## are safeguarded by a strong and ## effective Board.” Jean-Paul Luksic Chair of the Nomination and Governance Committee 2022 membership and meeting attendance Key activities in 2022 Number attended Jean-Paul Luksic (Chair) 3/3 Corporate governance Vivianne Blanlot 3/3 • Monitored the fulfilment of the UK Corporate Governance Code Tony Jensen 3/3 (the Code) requirements. Other regular attendees included the Company Secretary. • Reviewed Directors’ declarations on potential conflicts of interest. The Committee meets as necessary and at least twice per year. • Reviewed the Governance section of the 2021 Annual Report and Except for the Chairman, all Committee members were independent in 2022. recommended it to the Board for approval. • Reviewed arrangements for the 2022 AGM which allowed for the Key responsibilities Company’s inaugural hybrid meeting and the publication of the 2022 AGM Notice. The Nomination and Governance Committee supports the Board in • Reviewed feedback from investors and proxy advisers on the ensuring that the Group has effective governance structures in place shareholder resolutions tabled at the 2022 AGM. and that the Board and its Committees are appropriately staffed and Succession planning operate effectively. The Committee identifies qualified individuals to join • Reviewed and endorsed detailed succession plans for the Board, the Board, recommends any changes to the composition of the Board its Committees and the CEO. and its Committees and monitors an annual process to assess Board • Continued to provide input to the Remuneration and Talent effectiveness. Management Committee in relation to succession plans for This involves: the Executive Committee (excluding the CEO) and the Group’s • monitoring trends, initiatives and proposals in relation to diversity and inclusion programme. corporate governance Board and Committee composition • overseeing and facilitating annual reviews of the Chairman, the • Reviewed the independence of all Directors, making Board, its Committees and individual Directors, including externally recommendations to the Board. facilitated reviews • Managed the global search carried out for an independent Non- • evaluating and overseeing the balance of skills, knowledge Executive Director. and experience on the Board and its Committees • Interviewed and considered potential Board candidates. • monitoring the independence of Directors • Reviewed and endorsed updates to the Board’s skills matrix. • overseeing Board succession plans and leading the process to identify Board effectiveness reviews suitable candidates to fill vacancies, nominating such candidates for • Oversaw the implementation of recommendations arising from approval by the Board and ensuring that appointments are made on the 2021 internal evaluation of Board and Committees’ performance. merit and against objective criteria • Oversaw the 2022 externally-facilitated evaluation of the Board • overseeing the induction of new Directors and the development and Committees by Clare Chalmers Limited, an external Board of all Directors evaluation consultancy. • overseeing CEO succession plans • Requested a performance review of the Chairman by Directors, led by the Senior Independent Director, and of individual Directors, led by the Chairman with support from Clare Chalmers Limited. Antofagasta plc Annual Report 2022 125 Corporate Governance / Nomination and Governance Committee report continued # Diversity, inclusion and succession planning ## 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 142. ## 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 weakness 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. ## 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 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 128, the Group's purpose, vision, values and strategy, as shown on pages 112-113, the Board's diversity policy (below) and the core competencies and areas of expertise on the Board, as shown on page 120. To assist with making new appointments to the Board, the Committee appoints independent external search consultancies with no connection to the Group. Between 2019 and 2021, 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 search for new independent Non-Executive Directors. They 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. Members of the Committee interviewed short-listed candidates and collectively selected Tony Jensen and Eugenia Parot to be recommended to the Board for appointment in 2020 and 2021, respectively. The searches that resulted in these appointments aimed to identify candidates with mining operations experience (to cover the valuable skill set of a departing Director) and recent and relevant financial experience (as part of the succession plan for the role of chair of the Audit and Risk Committee). 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. For the 2020 appointment, a global search produced several hundred potential candidates for consideration, from which a shortlist of seven were interviewed, four of whom were female – and the 2021 process resulted in the appointment of a female candidate. ## 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, including gender, disability, nationality, educational and professional experience, personality type, culture and perspective. 126 Antofagasta plc Annual Report 2022 | 50% | 100% | >50% | | --- | --- | --- | | of Board appointees since | of our operating companies | of our Board members | | 2014 have been women | have female Board members | identify as being from an ethnic | minority background The Committee has worked hard to ensure that the Board is suitably In 2019, we sponsored the creation of a Chilean chapter of the 30% diverse according to these criteria. The Board reviews its Club, the campaign launched in the UK in 2010 to foster gender effectiveness in meeting diversity goals each year as part of the balance on companies’ boards and in senior management positions. annual Board and Committees’ evaluation process. To further promote diversity at the Executive Committee level and below, the current Diversity and Inclusion Policy was approved The Company has met the Parker Review target and more than half following an in-depth exercise to assess whether the Group’s the Board members identify as being from an ethnic minority existing diversity and inclusion model was appropriate. This included background according to the Parker Review criteria. As noted interviews with stakeholders, a benchmarking exercise and a throughout this Annual Report, the Group’s activities are focused in comprehensive review of the Group’s policies and processes. The Chile where ethnicity profiles and representation in society differ review identified structural impediments that needed to be addressed significantly from those in the UK. Nevertheless, the Board to achieve a sustained improvement in the Group’s diversity and recognises that the mining industry is international, and in support of inclusion model and these issues were addressed in the first years its vision and strategy also includes Directors from outside Chile. following approval of the new policy. Gender diversity is a pillar of the Group’s diversity and inclusion Metrics associated with the development of the Diversity and strategy. The Board supports the important work performed by the Inclusion Policy form part of the Group’s Annual Bonus Plan and FTSE Women Leaders’ Review in pursuing a 40% target for formal talent management and succession planning exercise, and women on FTSE 350 boards and on executive committees and performance is assessed by the Remuneration and Talent their direct reports. Management Committee at the end of each year. Since 2014, three of the six Board appointees (50%) have been The Remuneration and Talent Management Committee is also women and the Board actively seeks to increase female responsible for succession planning for the Executive Committee, representation beyond the current level, while ensuring that which allows for ongoing monitoring of the impact of the Diversity appointments continue to be made on merit. and Inclusion Policy on new appointments and their progress within At the date of this report, there are three women on our Board of ten the Company, including at the level of those who report to the Directors (30%). Vivianne Blanlot joined the Board in 2014 and has Executive Committee. chaired the Board’s Sustainability and Stakeholder Management As part of the Policy, female members of senior management have Committee since January 2017. Francisca Castro joined the Board in been appointed to the boards of all our operating companies and we 2016 and has chaired the Board’s Remuneration and Talent have two women on the Executive Committee, the General Manager Management Committee since May 2019. Eugenia Parot joined the of our Transport division and the Vice President of Human Board in 2021 and sits on the Sustainability and Stakeholder Resources. Management Committee and the Projects Committee. It is important to acknowledge that culture plays a key role in this and The Committee, supported by an independent external search we have therefore implemented actions and programmes to consultancy, continues to seek potential female candidates who strengthen an inclusive culture, encompassing unconscious bias could make an important contribution to the Board in the future and training, work-life balance measures, sexual harassment and the Board is working to achieve gender diversity targets of 40% domestic violence prevention, and information campaigns. Human representation of women on the Board and of at least one woman in resources processes, such as recruitment and the individual the Chair, Senior Independent Director, CEO or CFO roles. These performance management system, have been reviewed and adjusted objectives have been incorporated into the Board’s succession plans to assure their inclusiveness and lack of bias. and the Committee aims to achieve these goals by continually searching for candidates with the required skills and methodically Since 2017, we have more than doubled female participation to over preparing for ordinary Board refreshment and turnover in order to 20% and recently set ourselves a goal of reaching 30% female ensure continuity and performance of the Board’s responsibilities. participation by 2025. The gender balance at each level of the Group is monitored and reported monthly to the Executive Committee. We are committed to increasing the percentage of women on our Board, as well as in senior management positions and, just as More detail on programmes we have introduced and the gender importantly, in the Group’s workforce. We believe that such an balance within the Group is given in the Our People section on increase will benefit the Group, the industry and Chile. pages 48-50. Q. What policies are in place to promote a diverse pipeline The Board will continue to monitor developments in 2023. 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 well behind more developed economies. Antofagasta plc Annual Report 2022 127 Corporate Governance / Board effectiveness ## Board effectiveness review In accordance with the Code, the Board undertakes an externally facilitated effectiveness review 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. The 2022 review process commenced with the Nomination and Governance Committee planning the scope of the evaluation. The Committee considered a shortlist of external evaluators for approval by the Board. Clare Chalmers Ltd is a leading provider of board evaluations in the UK, with strong experience in evaluating FTSE-listed Boards. The Board found the 2019 evaluation performed by Clare Chalmers Ltd to be insightful and agreed that it would benefit from building on this by engaging Clare Chalmers Ltd a second time. The selected evaluator discussed the process with the Chairman, Senior Independent Director and the Company Secretary and agreed the interview framework agenda to be discussed with Board members, Company Secretary, members of the Executive Committee who regularly attend Board and Committee meetings and the Company's Lead External Audit Partner and Remuneration Adviser, who all held one-on-one interviews with the evaluator. Feedback on individuals was provided to the Chairman, for him to provide feedback to Directors on a one-to-one basis, and the Senior Independent Director (holding a closed session with the Non-Executive Directors) to provide feedback to the Chairman on his performance in the year. Ms Chalmers also observed a Board meeting, Audit and Risk Committee meeting and Nomination and Governance Committee meeting and conducted a review of Board and Committee papers, terms of reference, the annual report, output of previous board evaluations, the board's calendar and forward-agenda planner. She visited Chile to deliver the findings of her review in person. The review was designed to recognise and raise key themes identified collectively by the Directors, as well as for the evaluator to give their own perspective from meeting observations and document review, along with suggestions for improvement and of good practice, and for the Directors to reflect on how these themes should be addressed going forward. Ms Chalmers discussed her report initially with the Chairman and the Senior Independent Director and then presented it to the full Board in October 2022. The findings of the review were discussed by the Board and, based on Ms Chalmers' report, the Directors were satisfied that the Board and its Committees operated effectively in 2022. Ms Chalmers highlighted the Board's strengths as strong 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. Recommended opportunities for further improvement were also highlighted. These are set out below. In 2020 and 2021, internal evaluations of the Board and its Committees were carried out to monitor progress and identify further opportunities for improvement, using targeted anonymous surveys of the Directors. The survey results demonstrated how recommendations made in the 2019 external review had been addressed despite the challenges associated with the pandemic. Jean-Paul Luksic Chair of the Nomination and Governance Committee ## 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, ESG) - Board efficiency (Board meetings, agendas and minutes and secretariat) - The Committees - Board and Committee papers ### 2023 The Board will focus on several areas to improve effectiveness: - More concise presentations - Board discussions at more preliminary stages before final decisions are required - More proactive agenda setting - More streamlined delivery of information to the Board that is covered in the Committees 128 Antofagasta plc Annual Report 2022 / Audit and Risk Committee report ## Robust controls focused ## on the business ## “We focus on robust risk management ## and control. During the year, ## we reviewed external and internal ## audit functions, internal control, ## compliance and risk management ## capabilities. The Group is stronger ## as a result.” Tony Jensen Chair of the Audit and Risk Committee 2022 membership and meeting attendance Key activities in 2022 Number attended Tony Jensen (Chair) 7/7 Financial reporting Jorge Bande 7/7 • Reviewed the 2021 year-end and 2022 half-year financial reports, Francisca Castro 7/7 focusing on significant accounting matters relating to the Group’s results. Other regular attendees included representatives from PricewaterhouseCoopers (PwC), the Group’s external auditor, the CEO, the CFO, the Group Financial Controller, • Reviewed accounting matters likely to impact 2022 year-end results. the Head of Internal Audit, the Head of Risk, Compliance and Internal Control and the • Reviewed the Group’s 2021 Reserves and Resources Statement and Company Secretary. The Committee meets as necessary and at least twice a year. It works within the corresponding audits. Reviewed highlights of the 2022 statement. framework of a detailed annual work plan. Committee members participate in all other Audits of reserves were carried out at all operating companies. Board Committees, allowing the Committee to consider the full spectrum of risks Resources audits will be performed during 2023. faced by the Group. All Committee members are independent and are considered to have recent and relevant • Assisted the Board in ensuring that the 2021 Annual Report was fair, financial experience, as well as significant experience relevant to the mining sector. balanced and understandable. • Reviewed analysis for the 2022 going concern and long-term viability Key responsibilities statements, including preparation for a future resilience statement. • Implemented plans to accelerate the financial reporting cycle, which The Audit and Risk Committee assists the Board in meeting its enabled a successful earlier results announcement in February 2022. responsibilities relating to financial reporting and control, and to • Reported under the Task Force on Climate-related Financial risk management. Disclosures (TCFD) framework for the first time in the 2021 Annual Report, with disclosures appropriately reflecting the Group’s position. The Committee’s main responsibilities include: • Reviewed action plans to prepare for a potential future requirement • monitoring the overall financial reporting process, which includes for the Board to confirm the effectiveness of internal controls over responsibility for reviewing the year-end and half-year financial financial reporting. reports, • Reviewed the Group’s tax strategy and tax position, including the • overseeing the external audit process and managing the relationship effective tax rate, recovery of tax refunds, tax-disallowed expenses with PwC, the Group’s external auditor, and proposed changes to the tax regime and mining royalties in Chile. • 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. Antofagasta plc Annual Report 2022 129 Corporate Governance / Audit and Risk Committee report continued External audit Risk and internal control • Conducted a tender process in respect of the 2024 audit, resulting • Assisted the Board with its assessment of the Group’s key risks and in the selection of Deloitte as the Group’s external auditor. its review of the effectiveness of the risk management and • Reviewed and approved the 2022 audit plan, including fees. Validated internal control processes. that PwC incorporated feedback from both the Committee and • Assisted the Board in conducting the annual review of risk appetite management on the 2021 audit and engaged extensively with statements. management to align on critical success factors. • Conducted detailed reviews with the General Managers of each of the • Assessed the effectiveness of the external audit process, reviewed Group’s operations, covering the operations’ key risks, residual risks, PwC’s independence and approved its performance. climate change risks, materialised risks and identified opportunities. • Reviewed the Group’s policy in respect of auditor independence • Reviewed the draft of the proposed new Chilean constitution and its and non-audit services. potential impact on key risks. The proposal was subsequently rejected • Reviewed the key audit findings in respect of the 2021 audit and by a national referendum. reviewed PwC’s progress reports in respect of the 2022 audit. • Reviewed the latest developments in cyber security and updated • Implemented plans which resulted in the successful acceleration action plans to enhance the Group’s risk management maturity in this of the audit timetable for a February 2022 results announcement. key area. • Reviewed regulatory changes including the Department for Business, • Reviewed the activities undertaken during the year to further develop Energy and Industrial Strategy (BEIS) review, developments in the maturity of the Group’s risk management processes. auditing standards and the FRC’s areas of focus, including its audit • Reviewed the steps taken to ensure that slavery and human trafficking quality inspection and supervision report. are not occurring in any part of the Group’s business, including in its supply chains. Internal audit • Reviewed key findings from the internal audit reviews conducted Compliance during 2022. • Reviewed the Group’s whistleblowing arrangements, including details • Reviewed the quality, experience and expertise of the internal audit of the most significant reports and actions taken, along with plans to function, confirming its suitability for the business. strengthen the function. • Approved an update to the internal audit mandate. • Reviewed the process to identify and manage Group employees’ potential conflicts of interest. • Reviewed actions to co-ordinate audit scope with PwC to avoid duplication or double testing. • Reviewed the due diligence process conducted in respect of the Group’s suppliers. • Agreed the scope and focus areas for the 2023 internal audit plan including assurance approach and continuous auditing methodology. • 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, in accordance with Chilean and UK anti-corruption legislation. Antofagasta plc Annual Report 2022130 Q. What were the key areas of focus for the Committee We continued building our capability to prepare for new potential in 2022? regulations regarding the Board’s confirmation of the effectiveness We focus on robust risk management and control. During the year, of internal controls over financial reporting. we reviewed external and internal audit functions, internal control, The Committee assists the Board in undertaking its assessment compliance and risk management capabilities. We undertook a tender that the Annual Report is, when taken as a whole, fair, balanced process in respect of the 2024 audit, resulting in the selection of and understandable and that it provides the necessary information Deloitte as the Group’s external auditor from the 2024 audit to allow shareholders to assess the Group’s position and onwards. performance, business model and strategy. As part of this Financial reporting assessment, we used our detailed knowledge of the Company, its financial results and the key accounting judgements applied Q. What were the Committee’s main activities in respect in the financial statements to ensure that the tone and content of the Group’s financial reporting? of the narrative fairly reflected the financial results for the year. The Committee reviews the year-end financial statements and half-year financial reports and ensures that the key accounting We also reviewed the ore reserves and mineral resources statement policies, estimates and judgements applied in those financial included in the Annual Report and the corresponding reserve and statements are reasonable. We also monitor the overall financial resource independent audits. All recommendations stemming from reporting process to ensure that it is robust and well-controlled. This prior audits were resolved. The Committee also reviewed highlights includes ensuring that the Group’s accounting and finance function is of the 2022 statement. adequately resourced, with the appropriate segregation of duties and The Committee reviewed the going concern basis adopted in the internal review processes, that the Group’s accounting policies and financial statements, as well as the detailed long-term viability procedures are appropriate and clearly communicated, and that the statement in the Annual Report and has considered tests for an Group’s accounting and consolidation systems operate effectively. eventual future resilience statement. We monitored the implementation of detailed action plans to The Committee reviewed the Group’s tax strategy and tax position, accelerate the financial reporting cycle, enabling us to announce our including the effective tax rate, the status of the recovery of tax results in February 2022, three weeks earlier than in 2021. The refunds, tax-disallowed expenses and the impact of the proposed 2021 Annual Report included the first report under the Task Force changes to the tax regime and mining royalty in Chile. on Climate-related Financial Disclosures (TCFD) framework, with disclosures appropriately reflecting the Group’s position. It also included additional disclosures made to address the points raised by the Financial Reporting Council’s corporate reporting review team (“CRRT”) following their review of our 2020 Annual Report. Antofagasta plc Annual Report 2022 131 Corporate Governance / Audit and Risk Committee report continued Q. What significant accounting issues in relation to the financial External audit statements were considered by the Committee during 2022? Q. What are the Committee’s responsibilities in respect The main accounting issues we considered were: of the external audit process? The Committee is responsible for overseeing the Company’s • Asset valuations: our analysis did not identify indicators of a relationship with PwC, the Group’s external auditor. As the Chair of potential impairment at the 2022 year-end at the Group’s the Audit and Risk Committee, I have established an effective direct operations. Accordingly, we have not performed any impairment relationship with Simon Morley, PwC’s lead audit partner. reviews. Particular focus was placed on Zaldívar, given the importance of the ongoing permits renewal process, and The Committee reviews and approves the scope of the external audit, Antucoya, given the marginal level of headroom over recent years. terms of engagement and fees. The Committee monitors the An indicative valuation and sensitivity analysis was performed in effectiveness of the audit process and is responsible for ensuring the order to assess the sensitivities of the Group’s mining operations independence of the external auditor. The Committee informs the to key assumptions such as the copper price and the Chilean peso Board of the outcome of the external audit and explains how the exchange rate, and to make appropriate disclosures within the external audit contributes to the integrity of the Group’s financial financial statements. As part of this analysis, we considered the reporting. The Committee formally meets with PwC without appropriate copper price forecasts to use, with reference to the management present at least once a year. We approve the forward curve as at 31 December 2022 and to consensus analyst performance of the external auditor. The Committee makes forecasts of the long-term copper price. We have also reviewed recommendations to the Board in respect of the appointment, the key operating assumptions in the indicative valuation models. reappointment, or removal of the external auditor. We considered the estimates of the potential future costs relating Q. How do you assess the effectiveness of the external to climate risks (consistent with the TCFD scenario analyses) which were incorporated into the indicative valuations. In the case audit process? of Zaldívar, we considered the importance of the renewal of the We work closely with PwC to ensure that external audit quality is permits for water extraction and general mining activities to the maintained throughout the year. PwC incorporates feedback from indicative valuation, and the disclosures in respect of these both the Committee and management on the prior audit and engages aspects. We considered the marginal positive headroom for both extensively with management to align on critical success factors. Zaldívar and Antucoya. We also reviewed the additional sensitivity For example, during the height of the COVID-19 pandemic, we disclosures included in the financial statements. discussed in detail with PwC how to manage the external audit • Provision for decommissioning and restoration costs at the process, particularly considering travel restrictions. PwC Group’s mining operations: we reviewed updates to the mine implemented an appropriate mix of remote checks and on-site closure provisions, including updates to the closure plans reviews, preserving the robustness of the audit process. reviewed and approved by Sernageomin, the Chilean regulator, The Committee considers the following factors as part of its review and changes to the financial parameters used in calculating of the effectiveness of the external audit process during the year: the provision balance. • the appropriateness of the proposed audit plan, the significant • Reko Diq: we reviewed the accounting for the Reko Diq risk areas and areas of focus, and the effective performance transaction, including the conclusion that the agreements resulted of the audit, in the Group having a legally binding right to receive the exit proceeds with no further substantive events required and no • the technical skills and industry experience of the audit longer had joint control over the joint venture, and it was engagement partner and the wider audit team, accordingly correct to derecognise the investment in the joint • the quality of the external auditor’s reporting to the Committee; venture and recognise the gain on disposal in the 2022 year-end • the effectiveness of the co-ordination between the UK and Chilean results, as well as the determination of the disposal proceeds. audit teams, • Zaldívar secondary leaching inventory balance: we reviewed • the effectiveness of the interaction and relationship between the Zaldívar’s evaluation of its secondary leaching (ripios de alta ley Group’s management and the external auditor, or RAL) inventory balance, which is a significant item in terms of • feedback from management in respect of the effectiveness of the production volume and value, including the physical sampling audit processes for the individual operations and the Group overall; undertaken during the year. Our conclusion was that the inventory • the review of reports from the external auditor detailing balance is correctly stated. its own internal quality control procedures, as well as its • Going concern and viability: we reviewed the going concern annual transparency report, and and viability assessments and related disclosures. In particular, • the review of the FRC’s annual Quality Inspection Report on PwC. we considered the Group’s current strong financial position, its forecast future performance, the key risks which could impact the In light of this assessment, the Committee considers it appropriate future results and reviewed robust down-side sensitivity analyses that PwC be reappointed as external auditor for 2023. which all indicated results that could be managed in the normal course of business. Antofagasta plc Annual Report 2022132 Q. How do you assess the independence and objectivity of the A breakdown of the audit and non-audit fees is disclosed in Note 8 external auditor? to the financial statements. PwC has provided non-audit services The Committee regularly monitors the external auditor’s (excluding audit-related services) which amounted to $241,000, independence and objectivity in line with the Group’s policy in respect or 12% of the total Group fees for audit and audit-related services. of auditor independence and non-audit services, which was reviewed This related to the reporting accounting work by PwC UK for the in 2022. bond issuance. New regulatory requirements have applied since 2020 in respect In general, where the external auditor is selected to provide of non-audit services. The FRC issued a “white list” of specifically- non-audit services, it is because it has specific expertise or permitted services, with all other services prohibited. Permitted experience in the relevant area and is considered the most suitable services relate to specific activities required by law or regulation and provider. Pre-approval from the Committee is required before a limited number of types of review or verification work, such as non-audit services can be performed by the external auditor, other half-year reviews, verification of additional information contained than for services which are considered to be clearly trivial. The within the Annual Report or cross-referenced from the Annual Committee has reviewed the level of these services over the year Report, and work as a reporting accountant on transactions or debt and is confident that the objectivity and independence of the auditor issues. The provision of non-audit services is also subject to a cap, are not impaired by such non-audit work. so that the total annual fees from non-audit services may not exceed The external auditor provides a report to the Committee at least once 70% of the average audit fee over the prior three years. a year, setting out its firm’s policies and procedures for maintaining The issue of the $500 million bond in May 2022 required the Group its independence. to engage PwC UK to act as the reporting accountant for this The Committee considers that PwC remained independent and transaction, work which is effectively required to be performed by objective throughout 2022. the Group’s auditor. The Committee assessed this work and The UK regulatory requirements in respect of competitive audit determined that it was not considered to adversely affect PwC’s tendering and other related audit committee responsibilities in independence, taking into account the nature of the reporting respect of the external auditor are set out in the Competition & accountant work, and the level of fees relative to the Group’s total Markets Authority´s “The Statutory Audit Services for Large audit fees. The fees for this work were expected to exceed 70% Companies Market Investigation (Mandatory Use of Competitive of PwC UK’s average audit fees over the past three years (although Tender Processes and Audit Committee Responsibilities) Order it was not expected to exceed 70% of the average total Group audit 2014” (“the Order”). The Company has complied with the provisions fees paid to PwC over this period). Accordingly PwC UK requested of the Order during 2022. a waiver from the Financial Reporting Council in respect of this work prior to performing this work, which was granted. Antofagasta plc Annual Report 2022 133 Corporate Governance / Audit and Risk Committee report*continued* # **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 be in respect of the 2025 audit, marking the 10-year anniversary of the original audit rotation regulations. Other FTSE100 companies are facing similar anniversaries, which could result in an increased demand for audit tenders over the coming years. As previously disclosed, it was determined that the optimum approach would be 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 provide a significant transition period. PwC, Deloitte, EY and BDO participated in the tender process. KPMG declined. BDO meets 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 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 and other resources. Internal Audit takes a risk-focused approach when planning its work, in particular utilising 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 2022, the Committee approved an updated internal audit mandate and approved the 2023 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. "In 2022, we assisted the Board with its annual update of the Group's risk appetite assessment and evaluation of emerging and principal risks." During 2022, Internal Audit implemented a new system to manage its audit reports and findings. This is the system already used by the Risk and Compliance Management Department, further increasing the integration between the Risk and Internal Audit functions. The Committee reviewed actions to co-ordinate internal audit scope with PwC to avoid duplication or double testing, ensure an efficient relationship between the internal and external audit processes, and achieve the effective and timely sharing of findings. During 2022, Internal Audit performed part of its work remotely due to restrictions associated with the COVID-19 pandemic. The Committee monitored the quality of the audit work and is comfortable that an appropriate control environment has been maintained. # **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 2022 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 2022, 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, operation and tailings risks. 134 Antofagasta plc Annual Report 2022 Active risk identification and management took place, including: (1) change in principal risks over the coming 12 months. If there is geopolitical and macroeconomic risks with a focus on the impact of a specific issue at one of the operations that requires more detailed the war in Ukraine and discipline in cost management; (2) proposed understanding, we ask the General Manager to attend the next changes to legislation in Chile; (3) social risks; (4) climate change; meeting to discuss that issue. This direct interaction between and (5) supply chains. Actions were taken during 2022 to simplify the Committee and the General Managers is extremely valuable the risk management methodology and verify on-site key risks, carry – not just in terms of the direct insight into each operation it affords out change management for the implementation of the simplified risk the Committee, but in allowing us to emphasise the importance we management methodology, increase risk management maturity and attach to strong risk management processes. communicate our risk appetite. The business continuity plan was We reviewed steps taken to ensure that slavery and human verified. The focus in 2023 will be on implementing a new trafficking are not occurring in any part of the Group’s business methodology for materialised risks and reviewing financial reporting, including its supply chains. operational control and compliance. The Committee held a specific review of the latest developments The risk, compliance and internal control function presented to the in cyber security and updated action plans to enhance the Group’s Committee several times during the year on developments in the maturity in this key risk area. Group’s risk management processes and Group-level strategic risks. The General Managers of the Group’s operations presented to Q. How does the Committee interact with the Board and the Committee their assessments of their respective operations’ other Committees on risk-related matters? material potential risks, trends, residual risks, significant materialised I report to the Board following each Committee meeting, risks as well as operational opportunities. The meeting served as a summarising the main matters reviewed. These regular reports allow forum for sharing experiences and action steps. Directors to understand the main issues under consideration and, when relevant, to discuss them in more detail with the Board. The analysis of emerging and principal risks includes an assessment of the significance of the risks based on the probability of the risk The Risk Management function presents directly to the Board, materialising and the potential impact of the risk, as well as an providing updates of the analysis of the Group’s principal risks and evaluation of the quality of the controls in place in respect of those mitigating actions. specific risks. The evaluation of the potential impact is not limited We try to ensure that the review of risk by the Board is not to economic factors but includes issues such as safety, health, compartmentalised into isolated sessions but is integrated into environmental, regulatory, community and reputational issues. everything considered by the Board. To this end, the overall report We also examine whether those risks have been increasing provided by the CEO to the Board at each meeting covers any or decreasing in significance and the budget for each risk mitigation significant materialised risks. Each proposal presented to the Board objective to assist with the identification of emerging risks. incorporates an analysis of its impact on the principal risks. The General Managers present their forecasts of any expected Audit and Risk Committee, Board, and risk management function interaction BOARD RISK MANAGEMENT FUNCTION The Chair of the Audit and Risk Committee reports to the Board following each Committee meeting, The risk management function allowing a wider discussion of the risk and compliance issues reviewed in detail by the Committee. provides regular presentations The Board also provides feedback on the analysis of emerging and principal risks for Board agenda covering changes in the Group’s items which is incorporated into the Board’s review of the effectiveness of the Group’s risk emerging and principal risks, major management and internal control systems. materialised risks and updates on risk management and compliance processes. AUDIT AND RISK COMMITTEE There are detailed presentations at The Committee supports the Board in its review of the effectiveness of the Group’s risk each Committee meeting covering management and internal control systems. the risk management process, significant whistleblowing reports and updates on compliance GENERAL MANAGERS OF THE OPERATIONS processes and activities. 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. Antofagasta plc Annual Report 2022 135 Corporate Governance / Audit and Risk Committee report continued These processes have assisted the Board in carrying out a robust The Committee reviewed the Group’s whistleblowing arrangements, assessment of the emerging and principal risks facing the Company, which encourage employees and contractors to raise concerns in including those that could threaten its business model, future confidence about possible improprieties or non-compliance with the performance, solvency, or liquidity and to assess the acceptability Group’s Code of Ethics. We received regular reports on reported of the level of risks that arise from the Group’s operations and whistleblowing incidents, detailing the number and type of incidents development activities. and outlining the most significant issues and the actions resulting from their investigation, along with plans to strengthen the function. Each year the Board, with the support of the Committee, reviews the The Committee reviewed the process to identify and manage Group effectiveness of the Group’s risk management and internal control employees’ potential conflicts of interest, and reviewed the due systems. The review covers all material controls, including financial, diligence process conducted in respect of the Group’s suppliers. operating and compliance controls. The 2022 review confirmed the effectiveness of the Group’s risk management and internal control Q. What were the Committee’s main activities in 2022 relating systems, with no significant failures or weaknesses being identified. to internal control? Members of the Audit and Risk Committee participate on all the other During 2022, the Committee reviewed the Company’s internal Board Committees, allowing the Committee a good understanding control framework which consists of three lines of defence. of risks being considered by these Committees and the full spectrum First, business units identify and manage risks. Second, the risk of risks faced by the Group. management function provides oversight and support. Third, Internal Audit provides independent assurance. In addition to regular reviews, Compliance a session was held to review the effectiveness of risk management, Q. What are the Committee’s main responsibilities relating compliance and internal control, the effectiveness of internal controls to compliance? over financial reporting, and the effectiveness of internal audit and The Committee ensures that appropriate compliance policies and the relationship with external audit. We feel confident that the reviews procedures are observed throughout the Group. The risk, compliance undertaken by the Committee during 2022 have allowed it to and internal control function makes regular presentations to the perform an appropriate review of the effectiveness of the Group’s Committee covering developments in the Group’s compliance risk management and internal control systems during the year. The processes and significant compliance issues. Chilean law requires reporting of these activities by the Committee to the Board supports the Mining division’s holding Company, Antofagasta Minerals SA, the Board’s confirmation that it has undertaken a review of the and each of the operations, to appoint a Crime Prevention Officer. effectiveness of the Group’s risk management and internal control The Committee makes recommendations regarding these systems during the year as required by the UK Corporate appointments as well as monitoring and overseeing the performance Governance Code. of these roles. The Crime Prevention Officer for Antofagasta Minerals Tony Jensen SA is currently Patricio Enei, the Vice President of Legal. As the compliance function reports to the CFO, this arrangement provides Chair of the Audit and Risk Committee 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 2022 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 on the Group’s compliance model, crime prevention model and Modern Slavery Policy. We reviewed activities undertaken during the year to develop their maturity. Antofagasta plc Annual Report 2022136 / Sustainability and Stakeholder Management Committee report ## Sustainability and ## stakeholder management ## “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 safety and ## health of our workforce and ## other matters that support local ## communities where we operate.” Vivianne Blanlot Chair of the Sustainability and Stakeholder Management Committee 2022 membership and meeting attendance Key activities in 2022 Number attended Vivianne Blanlot (Chair) 5/5 Policies and commitments Ramón Jara 5/5 • Reviewed the Group’s Sustainability Policy and new Energy and Juan Claro 5/5 Water policies, aligned with The Copper Mark’s ESG performance Jorge Bande 5/5 evaluation and performance expectations according to ICMM´s principles. Michael Anglin 5/5 • Reviewed the implementation plan to adopt the new Global Industry Eugenia Parot 5/5 Standard on Tailings Management (GISTM), published by the ICMM in Other regular attendees included the CEO, the Vice President of Corporate Affairs August 2020. The Group has committed to fulfil its requirements by and Sustainability and the Company Secretary. August 2023 for its critical tailings’ deposits and by August 2025 for Sessions were also regularly attended by Directors who were not Committee members. its lower-risk ones. The Committee meets as necessary and at least twice per year. • Reviewed the updated Human Rights Policy. The Sustainability and Stakeholder Management Committee supports • Reviewed progress towards the achievement of the Copper Mark the Board in providing guidance on the Group’s safety, health, registration which was achieved by all of the Company’s mining environmental and social responsibility strategies and policies, operations. in the oversight of corresponding programmes and in making Safety and health recommendations to the Board to ensure the views and interests of the • Reviewed the Group’s safety and occupational health strategy, Group’s stakeholders are considered in the Board’s deliberations. performance and plans. Reviewed the task risk analysis process, The Committee reviews the Group’s framework of safety, health, psychosocial risk strategy and the safety plan for the new integrated environmental, human rights and social policies, monitors the Group’s remote operating centres. performance in setting and meeting environmental, social, safety and • The Board reviewed the 2022 report on the Company’s tailings occupational health commitments and provides guidance on how the storage facilities, issued by the independent technical review Board Company should reflect the views and interests of stakeholders appointed to advise the Group on their operation. 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 2022 137 Corporate Governance / Sustainability and Stakeholder Management Committee report continued # Community relations - Reviewed the water situation in the Choapa Valley after 13 years of lower-than-normal rainfall and Los Pelambres' water management strategy, including operational water management initiatives in order to best support communities. - Reviewed the public affairs strategy for the Group's northern operations. - Reviewed the Group's communications strategy and monitored results from the Group's communications activities. - Reviewed results from the Group's perception study, carried out every two years at a national level within the Choapa Province and Antofagasta Region and with national opinion leaders and Mining division suppliers. # Environment - Reviewed environmental management reports. - Reviewed the Group's response to the concentrate pipeline incident at Los Pelambres. - Reviewed environmental reviews related to Zaldívar's water rights extension. - Reviewed a progress report on the development of an inventory of Scope 3 emissions and next steps. # Q. How was the Group's safety performance in 2022? This was a true highlight for 2022. 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 42 High Potential Incidents, 35% fewer than in 2021. The Lost Time Injury Frequency Rate also improved, by 37% to 0.84. This year's challenge 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 for each individual operating Company. During 2022 the Committee provided input in relation to the proposed update to the Group's Sustainability Policy and new Energy and Water policies, which are aligned with the Copper Mark's ESG performance and expectations of the ICMM. The Committee also provided input on the implementation plan to adopt the new Global Industry Standard on Tailings Management (GISTM) which was published by ICMM in August 2020 and the Group's operating companies have committed to fulfil its requirements by August 2023 for critical tailings deposits and by August 2025 for lower-risk ones. The Committee also reviewed proposed updates to the Group's Human Rights Policy. # Q. How did the Committee consider climate change during the year? As noted by the Chairman on page 6, combatting 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, which has had 13 years with lower-than-normal rainfall. As part of this, the Committee also reviewed Los Pelambres' water management strategy and operational water management initiatives. The Committee reviewed a progress report on the development of an inventory of Scope 3 emissions and next steps. The Company has short-term and long-term Scope 1 and 2 emission reduction targets with the goal of achieving carbon-neutrality by 2050. During 2022, three years earlier than the target date of 2025, the Group achieved its Scope 1 and 2 30% reduction target and will set a new near-term goal in 2023. With respect to Scope 3 emissions, the Group has committed to define a long-term target in 2023 or as soon as possible thereafter. # Q. How does the Committee ensure that the Board considers the views and interests of stakeholders? The Committee does not interfere 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. 138 Antofagasta plc Annual Report 2022 Q. How does the Committee ensure that the Group’s tailings ## “The Committee makes storage facilities are safe? ## The stability and safety of our tailings storage facilities (TSFs) is a recommendations to the Board primary concern for us and many of our stakeholders, and the ## Committee and the Board are focused on ensuring that the policies to ensure the views and interests and procedures implemented by our operating companies ensure ## of the Group’s stakeholders that the TSFs continue to be stable and safe. ## Chile experiences a significant amount of seismic activity and as are considered in the Board’s a consequence there are strict regulations governing the ## deliberations.” 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 Q. What are the Committee’s priorities in 2023? commonly used in other countries but can pose significant safety Our number one priority continues to be the safety and health of our risks. Current Chilean legislation also requires a stability analysis of employees, contractors and local communities. We will continue to TSFs’ walls, a review of safety measures and the development of provide feedback to our mining operations, encouraging them to detailed emergency plans in the event of a major incident. further improve upon our record safety performance in 2022 and The Group’s governance structures are designed to encourage the continue to reinforce the practices that resulted in the strong independent management and monitoring of our TSFs: internal performance achieved in 2022. teams have reporting lines not linked to the mine operation and an The Committee will continue to receive feedback from our mining independent tailings review Board (ITRB) visits our TSFs regularly, operations on the implementation of the Group’s environmental assessing risks and making recommendations to ensure their management system and we will continue to oversee the continued safety. The Committee and the Board review these reports implementation of our Climate Change Strategy, aimed at meeting and challenge management on their recommendations. our greenhouse gas targets for reduced carbon dioxide emissions. The Committee and the Board also receive regular reports on the The Group has successfully contracted power supply agreements operation of the Group’s TSFs. Following the Group’s adoption in over the last few years and since April 2022 the electricity supply 2020 of a tailings management policy aligned with the Global contracts for all of our mining operations come from renewable Industry Standard on Tailings Management (GISTM), the Committee sources. has monitored operating companies’ implementation of this policy, along with reports from management and the ITRB. The Group’s The Committee will continue to oversee the implementation of the operating companies have committed to fulfilling the GISTM Group’s Climate Change Strategy during the year and to assess requirements by August 2023 for critical TSFs and by August 2025 whether the Group’s social programmes and the work done with for lower-risk TSFs. Operating companies have established their communities close to our operations is in accordance with the own governance structures, plans, tailings management systems and Group’s Social Management Model. implementation timelines. Vivianne Blanlot Further information on our TSFs, including the risks and the Chair of the Sustainability and Stakeholder Management governance measures in place, can be found on page 58. Committee 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 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. Antofagasta plc Annual Report 2022 139 Corporate Governance / Projects Committee report ## Project pipeline progressed ## during the year ## “The Committee reviews all ## aspects of major projects to be ## submitted for Board approval, ## highlighting key matters for the ## Board’s consideration.” Michael Anglin Chair of the Projects Committee 2022 membership and meeting attendance • Reviewed a $179.5m advance of funds to cover critical path activities Number attended for Los Pelambres’ Desalination Plant Expansion and Concentrator Michael Anglin (Chair) 4/4 Pipeline projects. Jorge Bande 4/4 • Reviewed the application of the Company’s internal carbon price in assessing alternative materials transport cases for the Polo Sur Ramón Jara 4/4 project Eugenia Parot 4/4 • Reviewed an in-pit tailings deposition project which considers using Other regular attendees included the CEO, the CFO, the Vice President of Projects, the Tesoro Central pit at Centinela, followed by the Tesoro North East the Projects Finance Manager and the Company Secretary. and Esperanza pits, to cover Centinela’s tailings management needs Sessions were also regularly attended by Directors who were not Committee members. for 15 years and possibly for the life-of-mine. The Committee meets as necessary and at least twice per year. Project reviews – execution phase Key responsibilities • Monitored progress in the execution of Phase 1 of the Los Pelambres Expansion project, including the revised capital expenditure estimate of $2.2 billion. Reviewed the consequences of the marine works The Projects Committee reviews all aspects of projects to be submitted incident. for Board approval, highlighting key matters for the Board’s consideration throughout the project’s development and making • Reviewed the project designed to repower and technologically recommendations to management to ensure that all projects submitted upgrade Los Pelambres’ coarse ore transport system, including to the Board are aligned with the Group’s strategy and risk appetite. updates to the project’s capital expenditure and development programme. The Committee adds an important level of governance and control to the • Monitored progress in the execution of the Zaldívar Chloride evaluation of the Group’s projects and plays a key role in providing the Leach project. Board with additional oversight of the Group’s projects portfolio. This includes overseeing the establishment of project development guidelines, Q. What is the Projects Committee’s approval authority? drawing from best practice, industry experience and lessons learned The Committee is not responsible for approving projects – that is for from other Group projects. the Board to decide. Our role is to assist the Board by ensuring that projects are following a standard, structured process using Key activities in 2022 consistent analysis, execution and evaluation practices. The Committee oversees the full project development, from the early Policies and commitments stages to the start of operations, carefully assessing and robustly • Reviewed the Group’s projects portfolio, including budgets challenging investment proposals prior to submission to the Board, and schedules. monitoring development and construction progress and ensuring Project reviews – studies phase lessons learned are applied to future proposals. The Committee • Reviewed progress with Centinela’s Second Concentrator project’s invites management to consider different perspectives, ideas and commitment phase and amendments to the timetable for a potential improvements to enhance the value of the Group’s projects, enabling execution decision. focused deliberation when the project is presented to the Board. • Reviewed a proposal to ensure water supply for the construction phase of Centinela’s Second Concentrator project. • Reviewed a proposal to award the electrical power contract for Centinela’s Second Concentrator project, subject to the project’s investment decision. Antofagasta plc Annual Report 2022140 ## “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.” Q. What tools does the Committee use? The Committee reviewed the project’s ESG profile, noting that 100% The Committee provides guidance to each project manager, from the of the power will come from renewable sources, and that it will use early stages of project planning through to completion, to ensure that sea water and thickened tailings. Environmentally, the project seeks policies, strategies and the Group’s Asset Delivery System (ADS) to avoid and, if necessary, control any environmental impact implementation framework are applied. associated with its development, including air quality, archaeological preservation and biodiversity. Socially, the project seeks to generate ADS is a project management system whose processes and positive externalities and benefits in the supply chain and manage practices are widely used in the mining industry. ADS sets standards reputational risks. It has identified all relevant stakeholders, and common criteria, including governance by a steering committee, established a community relations strategy and is developing functional quality assurance reviews and risk management. stakeholder, community and communications plans. With respect to In some cases, the Committee may recommend additional measures, climate change, the objective is to facilitate early action and including independent peer reviews, trade-off studies or further adaptation in relation to risks and opportunities. analysis in relation to the incorporation of potential new technologies The Committee reviewed the project’s financing plan. It also reviewed or processes. opportunities associated with the potential outsourcing of the sea Q. What were the Committee’s key activities in 2022? water supply system and electrical substations. The Committee endorsed a proposal to ensure water supply for the construction Execution – Phase 1 of the Los Pelambres Expansion project phase of the project through to August 2024 and reviewed an A new capital estimate of $2.2 billion was endorsed by the Committee electrical power contract subject to the investment decision. and approved by the Board, addressing the impact of the COVID-19 pandemic, execution plan interferences, input price increases and In line with our disciplined approach to capital allocation, the decision other deviations related to the social and geopolitical environment. on when to submit the project to the Board for approval during 2023 will consider the completion date of the Los Pelambres Expansion A marine works incident caused by unseasonal sea swells impacted project as well as ongoing discussions on the tax reform and mining the project schedule, delaying the start date of the desalinated water royalty bills in Chile, and the rewriting of the Chilean constitution. supply until the second quarter of 2023. The Committee discussed the investigation and lessons learned from the incident. See page 88 for more information on Centinela’s Second Concentrator project See page 86 for more information on Phase 1 of the Los Pelambres Expansion project. Studies – Polo Sur project The Committee reviewed the application of the Company’s internal Execution – Coarse ore conveyor project carbon price for the Polo Sur project used as part of the The Committee reviewed developments in the execution of the determination of the relative attractiveness of alternate conveyor, project to repower and technologically upgrade Los Pelambres’ truck and road train transport cases. coarse ore transport system, including updates to the project’s capital expenditure and development programme. Studies – In-pit tailings deposition project The Committee reviewed an in-pit tailings deposition project which Execution – Zaldívar Chloride Leach project considers using the Tesoro Central pit at Centinela for tailings The Committee monitored progress following mechanical completion, deposition, followed by the Tesoro North East and Esperanza pits, achieved in December 2021, and progress towards operational covering Centinela’s tailings management needs for 15 years and transfer to Zaldívar in February 2022. possibly for the Base Case life of mine of the concentrator plant. See page 87 for more information on the Zaldívar Chloride Leach This project would defer investment in raising the height of the project walls of the current tailings storage facility. The Committee supported a recommendation from Centinela to start the project’s Studies – Future development of Los Pelambres commitment phase. The Committee reviewed progress of the separate EIA applications for Phase 2 of the Los Pelambres Expansion project, involving Q. What are the Committee’s priorities in 2023? the desalination plant expansion and mine life extension, and The Committee will continue to monitor the Group’s key projects. recommended that the Board approve funds to advance the Los The Committee will continue to oversee the completion of Pelambres’ rerouted concentrate pipeline and water supply pipeline construction of Phase 1 of the Los Pelambres Expansion project. to cover critical path activities. The Committee plans to review the investment decisions for See page 87 for more information on Phase 2 of the Los Pelambres Centinela’s Second Concentrator project and the Polo Sur project. Expansion project The Committee will review the progress of studies for Phase 2 Studies – Centinela Second Concentrator project of the Los Pelambres Expansion project. The Committee reviewed progress on Centinela’s Second Michael Anglin Concentrator project, currently in the commitment phase leading up Chair of the Projects Committee to a potential investment decision, in order to progress project development with further detailed engineering, construction permitting and risk mitigation. Antofagasta plc Annual Report 2022 141 Corporate Governance / Remuneration and Talent Management Committee Chair's introduction # Enabling our strategy through pay and talent management practices ![img-17.jpeg](img-17.jpeg) Francisca Castro Chair of the Remuneration and Talent Management Committee 2022 membership and meeting attendance¹ | | Number attended | | --- | --- | | Francisca Castro (Chair) | 6/6 | | Michael Anglin | 6/6 | | Vivianne Blanlot | 5/6 | | Tony Jensen | 6/6 | 1. During the year the Committee also met with independent remuneration consultants Willis Towers Watson outside formal meetings to receive an update on global remuneration and talent management strategies and implementation, and on investor and proxy adviser advice ahead of the voting season. - 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 in 2022. Key report sections: | Remuneration 'at a glance' | 146 | | --- | --- | | Remuneration Policy | 149 | | Single figure remuneration table | 155 | | Remuneration for 2023 | 165 | "As a Committee, we seek to ensure the best pay practices for Antofagasta in order to remain a world-class employer attracting and retaining the best talent." Dear shareholders I am pleased to present the 2023 Directors' and CEO's Remuneration Policy and 2022 Directors' and CEO's Remuneration Report. - This report comprises this letter, an 'at a glance' section, the 2022 annual report on remuneration, which details the implementation of our pay policy in 2022 and the 2023 Directors' and CEO's Remuneration Policy. 2023 Directors' and CEO's Remuneration Policy The 2023 Directors' and CEO's Remuneration Policy ("2023 Policy") is set out on pages 149-154 and is being presented to shareholders for approval at the 2023 AGM. Subject to approval, the policy will supersede the 2020 Directors' and CEO's Remuneration Policy approved by shareholders at the 2020 Annual General Meeting ("2020 Policy"). In developing the 2023 Policy, the Committee undertook a detailed review of the 2020 Policy, considering the impact of potential changes on overall quantum, developments in market practice and expectations in the UK and in Chile, the alignment between pay and performance during the current policy period and feedback from employees, shareholders and other stakeholders. In proposing the 2023 Policy, the Committee has concluded that the Group's fundamental remuneration structures continue to be fit for purpose. For executive pay, this includes a base salary, an annual bonus plan that pays out in cash and an LTIP that consists of a combination of restricted and performance awards, with the payment of LTIP awards in cash on vesting. While some components of these structures continue to differ from those of companies with a significant presence, headquarters and CEO based in the UK, the Committee believes that our remuneration structures have worked well. We consider that our variable remuneration arrangements are simple, easily understood and are effective for our circumstances, while incorporating an appropriate blend of local Chilean market practice and the expectations of a company with a premium listing on the London Stock Exchange. 142 Antofagasta plc Annual Report 2022 While we recognise that some shareholders expect senior executives to maintain share ownership as a percentage of base salary both during and following employment, the Committee considers that given the Company's controlling shareholding interest and governance structures, there are sufficient checks and balances in the Group to ensure that executive pay is aligned with the long-term interests of the Company. Although the Committee decided that no changes to core remuneration structures were necessary, the market for executive talent for successful companies remains competitive and therefore some changes were required. The Committee debated extensively the most appropriate ways to ensure that we retain and motivate our senior management within the framework of the current pay structure. Following these deliberations, we have proposed to change the CEO's policy and contract by extending the notice period and including change of control protections and an incentive to work with a successor, whenever necessary, in the future. As part of the process of reviewing our 2020 Policy, I engaged with our key shareholders and proxy advisers on behalf of the Committee to explain these proposals and reported the feedback received to the Committee for its consideration in finalising the 2023 Policy. I received feedback that shareholders understood our unique circumstances and our 2020 Policy's longstanding application and appropriateness and were generally supportive of these proposed changes. However, the Committee did receive feedback that a payment of 12 months was the accepted norm for UK governance purposes for a termination payment to an executive director in a change of control situation and we changed our original proposal for a longer 24 months termination payment following our engagement with shareholders. I would like to thank all our shareholders who engaged with us and provided valuable input and continued support. #### **2022 Directors' and CEO's Remuneration Report – 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 "at a glance" section of the 2022 Directors' and CEO's Remuneration Report on page 146. However, I would like to highlight a number of important perspectives for this report: - Our CEO sets the standard in prioritising the safety and wellbeing of our employees and contractors and the Group plays a major role in supporting the Chilean economy, local communities and other stakeholders as set out in detail on page 44 of the Annual Report, - We maintain excellent relations with our workforce and five new collective bargaining agreements were successfully concluded by October 2022. 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, - Despite a challenging year resulting in a decrease in revenue and profit before tax, primarily as a result of lower copper realised prices and lower copper sales volumes, the Group has had solid operational results meeting its adjusted production and cost targets, generating EBITDA of $2.9 billion, while continuing with essential growth and innovation projects, - The safety and health of people remains our top priority. In 2022, the Group achieved record safety results, with no fatalities, a reduction in High Potential Incidents (HPIs) and in the Lost Time Injury Frequency Rate (LTIFR), and the implementation of a supervisors' leadership skills training programme adding to the robust framework already in place, - We strive to create a diverse and inclusive workplace that stimulates innovation and allows our employees to reach their full potential. In 2017, the Group underwent an assessment of its diversity and inclusion maturity level and was rated as Tier 2 – Emerging. In 2022, thanks to the implementation of our robust Diversity and Inclusion Strategy and action plans, the Group reached Tier 4 – Collaboration. We are also proud to report that female direct employees' participation reached 20.6% by the end of 2022. The Group remains committed to driving transformational change in order to establish itself as a leader in diversity and inclusion, which is crucial to the success of our business strategy, - To foster the growth and development of our workforce, our Talent Management Strategy is centred on maintaining the critical skills and abilities needed to overcome present and future business challenges. This is achieved through attracting and retaining talented individuals and providing career development opportunities within the Group, - During 2022, the Group concluded an engagement survey across all its group operations and, as a result, implemented action plans to address areas such as reward, recognition and talent acquisition. The Committee held a stand-alone session to discuss the outcomes of this survey during the year and will consider the valuable insights gathered from the survey in its future decision-making processes, - By the end of 2022 we had achieved our scope 2 reduction emissions for 2025, three years earlier than planned. All of our mining division's energy is now sourced through renewable contracts and during 2023 we will focus on building our decarbonisation plan for 2030, which will be aligned with our 2050 net zero ambition. In addition, we continue to focus on the climate related aspects of environmental health and sustainability through our climate roadmap, the circular economy and water efficiency. Antofagasta plc Annual Report 2022 143 Corporate Governance / Remuneration and Talent Management Committee Chair's introduction continued # CEO's performance and incentive outcomes for the year # Annual bonus outcome The overall bonus for the CEO was 81% of the maximum. The result for Core Business targets was 60% of the maximum, and this reflects the challenging head winds of higher inflation and input costs during the year. The result for the Business Development targets was 65% and the Sustainability and Organisational Capabilities targets was 70%, with safety being met in full. The outcome was adjusted as there were no fatal accidents during the year. This triggered a standalone upward adjustment to the total performance score outcome, equal to + 10%. As well as recording its best ever safety record, the Group also performed well in exploration, innovation, and Digital Transformation projects, resulting in these elements of the annual bonus paying out at 74%. Furthermore, the CEO demonstrated commitment and perseverance in delivering against challenging individual objectives, described on page 157. An illustration of the outcomes is shown below. Find out more on P156 # Annual bonus for 2022 ![img-18.jpeg](img-18.jpeg) Core Business Weighting 50% Business Development Weighting 25% Sustainability and Organisational Capabilities Weighting 25% # Total bonus payout 74% # LTIP outcome 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 overall LTIP vesting level will be 100% of the maximum. 100% of the Mineral Resources Increase target was achieved, as well as 100% of the Social and Environmental targets and 100% of the Projects' performance targets. During the performance period, the Committee amended target to remove the impact of exceptional events (Covid-19) in respect of the Los Pelambres Expansion project, reflecting delays outside of management control. The actual final vesting for the LTIP will be included in next year's report. # Mineral Resources Increase target met 100% # Social and Environmental targets met 100% # Projects' performance targets met 100% The Committee has considered whether the overall vesting of performance awards that were granted in 2020 could give rise to windfall gains and is satisfied that the LTIP awards fully reflect the achievements and shareholder value delivered during this time and should vest in full. In reaching this conclusion, the Committee has taken into account the relatively minor impact that the declaration of a global pandemic had on the Company's share price, the fact that no adjustment was made to increase the overall vesting of 2017 performance awards which vested in cash in March 2020, that the LTIP vesting value for 2022 is similar to the value for 2021, and the strong delivery of shareholder value over the performance period. This strong performance, despite market headwinds, is likely to give rise to the full vesting of the performance awards under the LTIP. Find out more on P158 144 Antofagasta plc Annual Report 2022 ## Our approach to the CEO's remuneration in 2023 ### Base salary Whilst not part of the 2020 Policy, as part of the remuneration review, the Committee acknowledged that our CEO's total pay has been consistently below comparable levels in the mining industry and those of our FTSE 100 peers, as competition for talent continues to become more global and a greater risk to the business. In accordance with the CEO's employment contract, inflationary and exchange rate adjustments were applied to the CEO's base salary in 2022. During 2022, this amounted to a cumulative CPI annual increase and an exchange rate increase. The significant market movements prompted the Committee to review the base salary positioning of the CEO. For the implementation of the policy in 2023, we increased in January the CEO's base salary from its December level by 20% to $1,255,552. Despite this change, the level of our target total CEO remuneration remains in the lower quartile of FTSE 100 mining companies and our core global copper mining peer group. Together with the changes in respect of the notice payments under the CEO's contract, we believe these changes will effectively retain our CEO over the next policy period. Find out more on P165 ### Annual bonus for 2023 Overall, our balanced scorecard for the annual bonus works well and focusses on the right KPIs. We have updated the performance measures and targets for 2023 in response to a review of our strategic priorities for the forthcoming year. For 2023, corporate expenditure has been removed from the core business metrics as a separate metric. The associated metric weight was added to the EBITDA as this metric already reflects both income and expenses including corporate expenditure. This change reduces the number of KPIs in our annual bonus plan in order to move towards a simpler and more effective scorecard. Additionally, safety and health of our employees are our top priority, and, in addition to the continued goal of High Potential Incidents reduction (HPIs), we have added a further element being the monitoring and reduction of occupational hazards risks (e.g. excessive noise, pollutants, as well as physical and mental wellbeing) of our employees. Our targets will be disclosed retrospectively in next year's remuneration report. In respect of our performance indicators relevant to Antofagasta's Climate Change Strategy, we have included objectives relating to the development of the Final Stage of the Decarbonization Plan of AMSA, the 2022 Stage of the Decarbonization Plan in the annual mining planning process, the Goal definition of Scope 3 emissions and the definition of the Carbon Offset Strategy. In addition to these goals, we intend to rework our roadmap, timeline and process methodologies to reach our 2030 Scope 1 and 2 goals. Find out more on P165 ### LTIP for 2023 Our fundamental LTIP structure and KPIs remain unchanged with a balanced scorecard measuring relative returns to shareholders, increasing resources and focusing on critical aspects of our projects portfolio, environmental and sustainability commitments. Find out more on P166 ### Directors' fees No fee changes are anticipated for Directors in 2023. Find out more on P167 As mentioned earlier in this letter, the fundamental structure of our policy is unchanged. It is simple and aligned with delivering our business goals and shareholder value, while reflecting practices in the international mining industry and in Chile. We must continue to reflect on where our operations are based so that our policy and structure are aligned across the Group, the Executive Committee and throughout the organisation. To our investors and the proxy advisers who met with us in developing the 2023 Policy, thank you for your support and constructive comments during our engagement. We look forward to your continued support for the 2023 Policy and the Remuneration Report at the AGM in May 2023. ### Francisca Castro Chair of the Remuneration and Talent Management Committee Antofagasta plc Annual Report 2022 145 Corporate Governance ## Remuneration at a glance ### Summary of business performance (strategic performance outcomes in 2022) TSR performance 200 150 100 50 0 Dec 22Dec 21Dec 20Dec 19Dec 18Dec 17Dec 16Dec 15Dec 14Dec 13Dec 12 Antofagasta FTSE All-Share Global X Copper Miners ETF | 646.2k | $0.62/ | | 0 | 20.6% | | 2050 net | | --- | --- | --- | --- | --- | --- | --- | | tonnes | share | | | | | zero target | | Copper production | EPS performance | | Fatalities | Female employee | | Group ESG | | | | | | participation | | objective | | CEO’s pay outcome | | $4,808k | | | 100% | | | for 2022 | | Total remuneration for the CEO | | | CEO’s individual performance | | 2022 Annual Bonus Element Measure Weighting Achievement (% of maximum) Core business EBITDA 12% 80% Production 22% 50% Cash costs 13% 55% Corporate expend 3% 95% Business development Growth 15% 50% Exploration 5% 85% Innovation 5% 85% Sustainability and organisational capabilities Safety 5% 100% People 5% 75% Environment 10% 50% Social 5% 75% Total outcome – pre-adjustments 64% Adjustment for meeting zero fatality target 10% Total outcome 74% LTIP: anticipated vesting in 2023 Element Measure Weighting Achievement (% of maximum) Relative total shareholder value TSR v EMIX Global Mining Index 50.0% 100% performance (estimated, see page 158) Mineral resources Increase over three years 25.0% 100% Projects’ performance Key projects’ milestones 12.5% 100% Environment and social performance 40% social management plan, 12.5% 100% 60% climate change and environment Total outcome 100% Antofagasta plc Annual Report 2022146 ### Summary of the Policy review Following a review of the Company’s policy, the Committee concluded that the remuneration structure remains fit for purpose and no material changes were required. 2023 Remuneration Policy Element 2023 Policy Base salary Automatic adjustment for Chilean inflation, market review and exchange rate review, as appropriate Pension None – Self-funded Benefits Market competitive Annual bonus 200% maximum 100% target 0% threshold LTIP 200% maximum Exceptional limit of 325% 70% Performance Awards and 30% Restricted Awards Malus and clawbacks Malus on LTIP However, as part of our proposed 2023 policy, some changes have been made to our CEO’s employment contract regarding notice periods and termination payments in order to ensure that the contract remains aligned with industry and international market practices (more details on page 153). These changes have been made to ensure that our contractual provisions safeguard our talent, allow time for succession planning, if needed, and reflect industry practices and international market expectations. Element Previous Policy Change Notice period 30 days notice 6 months’ notice Succession planning payment No provision in 2020 6 months for a successful handover and mentoring of new CEO for any future Policy succession Termination payment in No provision in 2020 12 months payment in respect of a corporate change of control event, if Company corporate Change in Control Policy terminates CEO’s employment control within 2 years of change in control. Quantum Our CEO’s base salary has been increased by 20% from 1 January 2023. However, the total target remuneration remains in the lower quartile of the CEOs of both a comparator group of mining companies in the FTSE100 and a comparator group of global copper mining peers. ### How the policy will be implemented in 2023 2023 Annual Bonus – performance award KPIs Element Pillar of strategy Measure Weighting Mining division’s performance (70% of bonus opportunity) | Core business | | EBITDA, Copper Production and Costs | | | --- | --- | --- | --- | | | Competitiveness | | 50% | | Business development | | Growth, Exploration and Innovation | | | | Growth | | 25% | Innovation Sustainability Safety and Health, People, Environment and Social ## People 25% Safety and sustainability Individual performance (30% of bonus opportunity) Individual performance The individual objectives for the CEO were based on critical ## 30% strategic areas as part of our vision for the company – organisation, culture, people, growth, competitiveness, safety and sustainability and innovation. 2023 Long-term incentive plan – performance award KPIs Element Pillar of strategy Measure Weighting | Relative total | | Antofagasta's TSR compared to Global X Copper Miners ETF | | | --- | --- | --- | --- | | | Competitiveness | | 50.0% | | shareholder return | | (CopX Index) performance | | | Mineral resources | | Net increase of mineral resources | | | | Growth | | 25.0% | increase | Project portfolio | | Progress of key projects portfolio, including Los Pelambres | | | --- | --- | --- | --- | | | Growth | | 12.5% | | progress | | Concentrate Pipeline and Desalination Plant Expansion, Centinela | | Second Concentrator and Zaldivar's Operational Continuity Solution. | Sustainability | | Progress on regulatory commitments made by the mining | | | --- | --- | --- | --- | | | Safety and sustainability | | 12.5% | | commitments | | operations and climate change strategy implementation. | | Antofagasta plc Annual Report 2022 147 Corporate Governance / 2023 Directors’ and CEO’s Remuneration Policy ## Our remuneration philosophy Although our CEO is not a Director of the Company, we have voluntarily ### Our remuneration philosophy reflects local disclosed his remuneration since 2014 and provided details throughout ### regulations and market practices while aligning the Remuneration Report to allow shareholders to understand how ### with UK best practices and governance. these structures support the strategy and promote long-term sustainable success. Since the implementation of the European Shareholders’ Rights Local regulations, market practices and remuneration structures Directive II implementation in 2019, these disclosures have become available in Chile are a central consideration when structuring the CEO’s mandatory and are included in this report. The final decisions in respect remuneration. Real share awards have not been part of the executive of the CEO’s remuneration are always made by the Committee and the remuneration structure for employees since the LTIP was first CEO is not present for this part of the meeting, ensuring that the implemented a decade ago because, until recently, in Chile they were Committee makes independent decisions in the best interest of taxable in full at the date they were granted. Considering the potential Antofagasta. future uncertainty on taxation and the use of real shares continues to be uncommon in Chile, all the Company awards continue as cash awards The Committee follows the UK Corporate Governance Code. The table linked to a notional number of shares and share price performance. below summarises how we have considered Code provision 40 when developing and implementing our remuneration strategy. Factor 2023 Policy Clarity Our rationale for operating two long-term (performance and restricted) incentive plans is straightforward Remuneration arrangements are and well communicated. The performance measures used in the Annual Bonus Plan and LTIP are used transparent and promote effective internally and externally in tracking and communicating business performance, ensuring that participants engagement with shareholders understand them well. The Committee Chair continues to engage with and seek the views of our and the workforce. shareholders on material changes to Executive Remuneration. Feedback from shareholders on the proposed 2023 policy update has been received and considered. Views of the workforce are taken into account via the workforce engagement mechanisms described in more detail on page 116. 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 Target ranges and potential pay-out levels are disclosed in advance, allowing shareholders and participants The range of possible values of to understand the potential value of the package in different performance scenarios. rewards for the CEO is identified The Committee carefully considers the performance measures for the annual bonus and LTIP each year and explained at the time and seeks to achieve consistency (when appropriate), with only necessary changes being made so that the of approving the policy. 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 Each element of pay is clearly communicated. Remuneration structures are Where appropriate, incentive arrangements flow down through the organisation to align the interests uncomplicated, and their rationale of employees and senior management with those of our shareholders and to encourage and share value and operation are both easy to creation. understand and consistent for the CEO and, where applicable, those below him. Proportionality Performance conditions in the annual bonus and performance share awards require a minimum level The link between individual awards, of performance before any payment is made to senior management, and performance targets are aligned the delivery of strategy and the with our business plan and strategy. There are clearly defined maximum opportunities, as determined in our long-term performance of the 2023 Policy. Company is clear. Risk Incentive plan performance measures are balanced to promote the right behaviours and appropriate Reputational and other risks from safeguards are put in place, including adjustments for safety performance. excessive rewards, and behavioural While clawback has not been introduced as such arrangements are not legally enforceable in Chile, risks that can arise from target- LTIP awards are subject to malus. based incentive plans, are identified and mitigated. The Committee retains the discretion to adjust outcomes under the plans for variable remuneration. Alignment to culture Our 2023 Policy continues to be aligned with the business objectives to create sustainable value and high Incentive plans drive behaviours profitability. We reward strong performance aligned with our business objectives, but only if the methods consistent with the Company’s used align with our safety and sustainability objectives. All Group employee performance bonuses, including purpose, values and strategy. the CEO’s, include an assessment of individual performance related to the Group’s Charter of Values. Antofagasta plc Annual Report 2022148 # 2023 Directors' and CEO's Remuneration Policy **The Committee presents the 2023 Directors' and CEO's Remuneration Policy, which will be put to a binding vote of shareholders at the Company's 2023 Annual General Meeting.** Subject to shareholder approval, this 2023 Policy will take effect from the 2023 AGM and is intended to apply until the 2026 AGM. The new 2023 Policy will supersede the remuneration 2020 policy approved by shareholders at the 2020 AGM. Once the 2023 Policy is approved, the Company will only make remuneration payments to Directors and the CEO, or payments for loss of office, if the payment is in line with the 2023 Policy. If the Committee wishes to change the 2023 Policy, it will submit a revised policy for shareholders approval. ## Policy scope This year there has been no change to the composition of the Board of Directors, which continues to comprise only Non-Executive Directors. The Board has considered the pros and cons of having executives on the Board and continues to believe that the existing structure is effective in ensuring that the Board maintains objectivity and independence from management. In addition, the structure is appropriate since the CEO, Executive Committee and most senior managers are based in Chile, where Company law prohibits the CEOs of public companies from serving as directors of those companies. The Company's policy is to ensure that the fees and remuneration of the Directors and the CEO reflect the responsibilities undertaken and to consider comparable remuneration packages and structures in the international mining industry, in the UK and Chile. The 2023 Policy being tabled for shareholder approval is consistent with the previous 2020 Policy and remuneration practices already in place. The Committee considers that the Company's approach to remuneration for the CEO and Non-Executive Directors is not only aligned with the Company's strategy but is effective and well understood. ## 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): - 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 2022 149 Corporate Governance / 2023 Directors’ and CEO’s Remuneration Policy continued Purpose and link to strategy Operation Maximum opportunity Performance measures ### Annual Bonus Plan | To focus on delivering | The bonus is earned based | Maximum of 200% of salary The bonus is based on financial, operational, | | | --- | --- | --- | --- | | annual financial and | on achieving one-year | | strategic and individual measures. | | non-financial targets | performance targets. | | | Performance measures and weightings are designed to align It is paid in cash. reviewed annually to ensure they continue remuneration with the to reflect the Company’s strategic priorities. Company’s strategy At least 50% of the bonus will be based on and to create a the Mining division’s financial, operational platform for future and strategic performance. Other metrics sustainable include, but are not limited to, business performance. 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% pay-out), with a pay-out 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 | Awards under the LTIP will | Maximum of 200% of salary, | Performance Awards will be based on | | --- | --- | --- | --- | | shareholders’ | typically comprise: | increased to 325% in exceptional | a combination of shareholder´s return and | | experience and focus | | circumstances. | strategic performance measures aligned with | • Performance Awards – on long-term, the business priorities. performance is measured sustainable over a three-year period The targets, measures and weightings are performance. | with vesting thereafter, | determined by the Committee annually. | | --- | --- | | comprising at least 70% | The shareholder return measures are at least | | of the total LTIP awards. | 50% of the Performance Awards. | • Restricted Awards – vest Performance Awards begin vesting at one-third each year over ‘threshold’ performance, with the amount a three-year period, depending on the performance metric. This comprising a maximum level is intended across all metrics to be 0% of 30% of the total LTIP at the threshold and an aggregate average awards. of approximately 50% of the maximum Awards will usually be made at ‘on-target’ performance. in the form of a conditional No performance conditions usually apply right to receive a cash to Restricted Awards. payment by reference to the The Committee retains the discretion to adjust value of a specified number payments to ensure they reflect underlying of the Company’s shares. business performance, the impact of the Malus may be applied in commodity price and any other relevant exceptional circumstances, factors. as detailed in the notes to this table. Antofagasta plc Annual Report 2022150 Notes to the Policy table Benefits Employees, including the CEO, are encouraged to save for their pension, and the Company facilitates a savings plan to which employees contribute. For several employees, excluding the CEO, the Company makes a matching contribution to a pension plan up to a maximum amount. The Company makes no contributions to the CEO’s pension. Operation of incentive plans The incentive plans are run in line with the Policy and the relevant plan’s rules, subject to several areas over which the Committee retains flexibility as detailed below: • Who participates in each plan. • The timing and size of an award and/or payment are subject to Policy limits. • The performance measures, weightings and targets that apply each year and any adjustments thereof. • The treatment of awards in the event of a change of control, restructuring or other corporate events. • Treatment of leavers. • Amendments to a plan’s rules in accordance with its terms. In the case of the CEO, any use of discretion by the Committee will be disclosed in the following annual report and may be subject to consultation with the Company’s shareholders. The Company reserves the right to make payments under the incentive plans to some or all participants in shares rather than cash if the regulations and practice change in Chile to allow payment in shares without adverse additional costs, administrative burden or tax consequences. The latter is seen as a beneficial practice by the Committee. Any further changes will be disclosed in the following annual report and shareholder approval will be sought if required for the proposal in question. Performance measures and targets Awards under the Annual Bonus Plan and a significant proportion of the awards under the LTIP are subject to financial and non-financial performance metrics determined annually by the Committee. The Committee reviews the appropriate business plans over the short, median and long-term and sets appropriate targets with a range of achievement to align with the corporate goals and strategy. The financial metrics align participants with the Group’s strategy and long-term sustainable shareholder value creation. The non-financial metrics measure the development of key projects and exploration activities essential for future mining activities. Other metrics may relate to safety and health, people, environmental and social targets, which ensure that all employees act in a way that preserves or creates social value and considers the interests of all the Group’s stakeholders. Restricted Awards are not subject to performance conditions; given market conditions in Chile, it is appropriate for part of the variable remuneration to be subject only to a time condition and continued employment. Malus and clawback Malus provisions apply in exceptional circumstances, including: • Actions by a participant that, in the reasonable opinion of the Committee, amount to gross misconduct that have or may have a material effect on the value or reputation of the Company or any of its subsidiaries. • A materially adverse error in the consolidated financial statements of the Group during the performance period. • Any reasonable circumstances that the Committee determines in good faith to have resulted in an unfair benefit to the participant. Clawback has not been introduced as such arrangements are not legally enforceable in Chile. Legacy arrangements During the term of this 2023 Policy, any payments may be made to satisfy commitments made or undertaken in respect of any LTIP award (Performance Award or Restricted Award) granted under a previous policy or payments made to meet legacy arrangements agreed upon prior to (but not in anticipation of) an employee (and not in contemplation of) being promoted to the position of CEO or the Board of Directors. All such outstanding obligations may be honoured, and payment will be permitted under the 2023 Policy. Minor amendments The Committee may make minor amendments to the 2023 Policy (for example, taxes, regulatory, exchange rate or administrative purposes) without obtaining shareholder approval. The difference in CEO and employee remuneration policy Apart from participation in the LTIP, which is limited to the Executive Committee and certain senior employees, there are no main differences between the 2023 Policy and the general remuneration policy for employees. Antofagasta plc Annual Report 2022 151 Corporate Governance # / 2023 Directors' and CEO's Remuneration Policy *continued* # **Illustrations of the application of the Policy** The graph below illustrates estimates of the potential remuneration opportunity for the CEO under three different performance scenarios: 'Minimum', 'Mid-point', and 'Maximum'. In line with the reporting regulations, a scenario assuming 50% share price growth over the three-year performance period is also shown below (for the maximum performance scenario). The assumptions used for these charts are set out in the table below. # **CEO total remuneration** ![img-19.jpeg](img-19.jpeg) | **Minimum performance** | - Fixed remuneration (salary and benefits) only. - No pay-out under the Annual Bonus or LTI performance awards. | | --- | --- | | **Mid-point performance** | - Fixed remuneration. - Fifty percent (50%) of the maximum pay-out under the Annual Bonus Plan. - Under the LTIP, vesting is 50% of Performance Awards and 100% of Restricted Awards. | | **Maximum performance** | - Fixed remuneration. - 100% of the maximum pay-out under the Annual Bonus Plan. - Maximum vesting under the LTIP: 100% of Performance Awards and 100% of Restricted Awards. | | **Maximum performance + 50% share price growth** | - Fixed remuneration. - 100% of the maximum pay-out under the Annual Bonus Plan. - Maximum vesting under the LTIP: 100% of Performance Awards, 100% of Restricted Awards and a 50% increase in the share price over the three-year performance period. | Other than for the scenario 'Maximum performance + 50% share price growth', no increase in the share price has been assumed in the graph above. Also, no dividend assumptions have been included in the charts above. # **Letters of appointment** All Directors' letters of appointment are available for inspection at the Company's registered office during regular business hours and at the Annual General Meeting (for 15 minutes before and during the meeting). # **CEO** Mr Iván Arriagada is employed under a contract of employment with Antofagasta Minerals SA (AMSA), a subsidiary of the Company. His work contract is governed by Chilean labour law. It does not have a fixed term and can be terminated by either party on six months' notice in writing. Any payment for termination or loss of office is provided in the table below. Under his employment contract, Mr Arriagada is entitled to 25 working days of paid holidays per year. As Mr Arriagada's salary is paid in Chilean pesos and is adjusted quarterly for inflation, at the end of the year, a further adjustment is made if the US dollar/Chilean peso exchange rate has increased by more than 5% to maintain international competitiveness. # **Chairman and Non-Executive Directors** Each Non-Executive Director has a letter of appointment from the Company and from AMSA. The Company has a policy of putting all Directors forward for re-election at each AGM, in accordance with the UK Corporate Governance Code. Under the terms of the letters, if a majority of shareholders do not confirm a Director's appointment, the appointment will terminate immediately. In other circumstances, either party may terminate the position on one month's written notice. The letters require the Directors to undertake that they have sufficient time to discharge their responsibilities. There is a contract between Antofagasta Minerals and Asesorías Ramón F. Jara Ltda, dated 2 November 2004, for the provision of advisory services by Ramón Jara. This contract has no expiry date but may be terminated by either party on one month's notice. No other Director is a party to a service contract with the Group. 152 Antofagasta plc Annual Report 2022 Policy on payments for loss of office If the Company terminates the CEO’s employment contract for reasons not attributable to the CEO, six months’ written notice must be given unless the Company pays compensation in lieu of notice. If the CEO resigns, he must give at least six months' written notice. In both cases, if the CEO’s employment contract terminates for reasons not attributable to the CEO or CEO’s resignation, if requested, the CEO will work with the Committee to appoint a suitable successor and ensure a smooth transition of responsibilities as well as providing mentoring. If the transfer is completed successfully, the CEO will receive an additional payment equal to six months’ base salary. If the Company terminates the CEO’s employment contract within two years of a specific corporate event, for reasons not attributable to the CEO, or if the CEO's role or function has been changed without prior agreement within two years of a specific corporate event, the CEO shall be entitled to an additional payment equal to 12 months’ base salary. The treatment of any outstanding incentive awards will be determined based according to each plan’s rules, as summarised in the table below: Annual bonus Employees who complete at least six months of service in a financial year are entitled to be considered for a bonus subject to the applicable performance targets having been met. Any payment will usually be pro-rated for the period of employment, although the Committee has the discretion to decide otherwise. If the employee’s period of employment is less than six months, they will not usually be entitled to be considered for a bonus. However, the Committee has the discretion to decide otherwise. LTIP The default position is that any outstanding Performance Awards or Restricted Awards will be forfeited on cessation of employment except if an individual is considered a good leaver e.g. their employment ends due to their death, redundancy, ill health injury or disability, an unexpected event or force majeure, or other reason at the discretion of the Committee. In respect of dismissal by the Company’s decision, or the employee's resignation with at least six months’ notice, they will be entitled to receive payment of any outstanding Restricted Awards and it will be pro-rated to the time served. Performance Awards will usually vest based on the satisfaction of the relevant performance targets (if applicable) and will be pro-rated to the time served. However, the Committee has the discretion to decide otherwise. Corporate event In the event of a change of control or winding up of the Company, LTIP awards will vest subject to the extent the or change of control performance targets have been satisfied (if applicable) and will be pro-rated for the period of the award elapsed, unless the Committee decides otherwise. In the event of an internal reorganisation, LTIP awards may (with the consent of the acquiring entity) be replaced by equivalent awards. Alternatively, the Committee may decide that the LTIP awards will vest as in the case of a change of control, as described above. In the event of a demerger, special dividend or other corporate event that will materially impact the share price, the Committee may, at its discretion, allow LTIP awards to vest on the same basis as in the case of a change of control, as described above. The Committee reserves the right to make other payments regarding the termination of the CEO’s employment. Any such payments may include paying reasonable fees for outplacement assistance and legal or professional advice. The letters of appointment for the Non-Executive Directors do not provide any compensation for loss of office beyond payments in lieu of notice; therefore, the maximum amount payable upon termination of these letters is limited to one month’s fees. Changes to the policy As highlighted in the at a glance section the only changes proposed are in relation to our CEO’s employment contract regarding notice periods and termination payments in order to ensure that the contract remains aligned with industry and international market practices. These changes have been made to ensure that our contractual provisions safeguard our talent, allow time for succession planning, if needed, and reflect industry practices and international market expectations. Element Previous 2020 Policy Change Notice period 30 days' notice 6 months’ notice Succession planning payment No provision in 2020 Policy 6 months of base salary for a successful handover and mentoring of new CEO for any future succession Termination payment in corporate No provision in 2020 Policy 12 months of base salary payment in respect Change in Control of a corporate change of control event, if Company terminates CEO’s employment within 2 years of change in control. Antofagasta plc Annual Report 2022 153 Corporate Governance # / 2023 Directors' and CEO's Remuneration Policy *continued* # **Policy on recruitment** When determining remuneration, the Committee will consider the new CEO's role, experience, and other factors such as relevant market data and internal comparisons. The Committee strives to pay competitively, but no more than necessary to attract the right talent. On appointment, the CEO's remuneration will generally align with the 2023 Policy, and the maximum aggregate value of incentives (excluding buyouts) will not exceed the 2023 Policy's defined maximum limits. The recruitment approach is outlined below: | Element | Policy and operation | | --- | --- | | **Base salary** | Base salary will be determined based on the individual's role and responsibilities, experience and skills, relevant market data and internal comparisons. The starting base salary may be set below the prevailing market rate, but with the expectation of higher-than-usual increases as the individual gains experience and performs in the role. | | **Benefits** | Benefits in line with the 2023 Policy, including relocation benefits if appropriate. | | **Annual bonus** | The structure described in the 2023 Policy table will generally apply for new appointees, with maximums typically pro-rated to reflect service during the year. For the first year of appointment, the Committee may determine that the annual bonus may be subject to modified terms considered appropriate in the context of the recruitment. | | **LTIP** | LTIP awards will be on the same terms as described in the 2023 Policy table. However, the Committee has the discretion to make changes in the first year of employment, including to the performance measures applied. Any change will be fully disclosed in the next Annual Report. | | **Buyout awards** | The Committee recognises that it may be necessary, in certain circumstances, to provide compensation for amounts forfeited from a previous employer. Generally, any buyout awards will be made on a like-for-like basis in terms of commercial value, form, application of performance conditions and timing of receipt to ensure they reflect the incentives they are replacing. | The approach towards an internal promotion will be consistent with the 2023 Policy outlined above. The Company will honour these legacy arrangements if an individual has contractual commitments or outstanding awards before their promotion. For interim positions, a cash supplement rather than a salary may be paid (for example, if a Non-Executive Director took on an executive function on a short-term basis). On the appointment of a new Non-Executive Director or Chairman, their remuneration will be in line with the 2023 Policy summary below. # **Chairman and Non-Executive Directors Remuneration 2023 Policy Summary** | 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 Chairman receives an annual base fee. Non-Executive Directors receive an annual base fee. Directors may receive further fees for serving as the 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 | In line with the UK Corporate Governance Code, Non-Executive Directors do not participate in incentives, share schemes, or receive a pension provision. # **Consideration of employment conditions elsewhere in the Group** When the Committee reviews the remuneration of the Directors and CEO, it considers pay conditions across the Mining division. This is done in the context of different working environments and geographies and therefore is not a mechanical process. The Committee does not currently use any other remuneration comparison metrics when determining the quantum and structure of Director remuneration. The Directors' and CEO's Remuneration Policy is well understood by employees and employees know that the CEO's remuneration policy is substantially similar to their own. The Chair of the Remuneration and Talent Management Committee has not therefore explained this to employees. The Committee considers employee pay practices and experiences at each meeting to ensure Antofagasta remains a world-class employer, attracting and retaining the best mining talent. # **Consideration of shareholder views** The Company maintains a dialogue with institutional shareholders, sell-side analysts, and potential shareholders. The Investor Relations team manages this communication, which includes announcements and a formal programme of presentations to update institutional shareholders and analysts on developments in the Group during the year. In addition, as part of the review of Director and CEO remuneration ahead of a new 2023 Policy being tabled for approval at the 2023 AGM, a series of meetings was held with top shareholders and proxy agencies in December 2022. These meetings were led by the Chair of the Remuneration and Talent Management Committee, who afterwards briefed the Committee on the feedback she received. The latter was taken into account when determining the final 2023 Policy to be approved by shareholders. 154 Antofagasta plc Annual Report 2022 / 2022 Directors’ and CEO’s Remuneration Report ## CEO’s single figure of remuneration ## 1 ## (audited) The table below sets out the remuneration received by the CEO in respect of the years ending 31 December 2022 and 31 December 2021. | | | | | | Restricted | | Performance | | | | Total | Total fixed | | Total variable | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Salary | Benefits | | Bonus | | Awards | | | Awards | | remuneration | | remuneration | | remuneration | | | $’000 | $’000 | 2 | $’000 | 3 | $’000 | 4 | | $’000 | 5, 6 | | $’000 | | $’000 | | $’000 | 1 Iván Arriagada 2022 833 115 1,705 520 1,635 4,808 948 3,860 1 Iván Arriagada 2021 755 36 1,230 390 1,722 4,134 791 3,343 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. 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. 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 2022 is a benefit of $6,505 and in 2021 was a benefit of $4,867. 3. Mr Arriagada’s 2021 annual bonus was paid following the date of publication of the 2021 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 2022, which was used to update the 2021 annual bonus, is CLP/USD 788 vs CLP/USD 844 in January 2022. 4. 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. 5. 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 2022 performance period. £13.16/share and USD/GBP 1.18. The value at the time of the grant reached $868,004 with a USD8.24/share and USD/GBP 1.18 with an increase in the value reported as $766,499. As noted on page 148, LTIP awards, including Performance Awards, are cash awards linked to a notional number of shares and the Company’s share price performance. 6. The Performance Awards included in the 2021 total vested on 29 March 2022. 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 99% of the maximum. The increase in the value reported for the 2019 LTIP reflects the change in share price and exchange rate at vesting. The share price and exchange rate used to value this award are £17.11/share and USD/GBP 1.31. For the 2021 LTIP, the value attributable to an increase in the Company’s share price is $275,330. This figure has been calculated using the market value of a share on the date the award was granted versus the average share price for the last three months up to December 2021. The value at the time of the grant reached $944,992 with a USD12.2/share and USD/GBP 1.30 with an increase in the value reported as $777,230. There was no entitlement to dividends or dividend equivalents. Antofagasta plc Annual Report 2022 155 Corporate Governance / 2022 Directors’ and CEO’s Remuneration Report continued Annual bonus Group performance (70%) The targets and achievements for the 2022 annual bonus are set out below. 70% of the CEO and Executive Committee’s 2022 annual bonuses were calculated based on the Group’s performance against these criteria in 2022: Threshold On-target Maximum Actual Achievement Measure Weighting % (0% vesting) (50% vesting) (100% vesting) achievement (% of maximum) Core business 50% 60% 1 EBITDA – Mining division ($m) 12% 2,411 2,679 2,946 2,844 80% 2 Copper production (kt) 22% 623.9 643.8-663.7 673.7 646.2 50% 3 Cash costs before by-product credits ($/lb) 13% 2.324 2.192 2.061 2.185 55% 3 Corporate expenditure ($m) 3% 139.3 132.6 126.0 126.6 95% Business development 25% 65% 4 Growth projects 15% 50% Measured according to the schedule and budget, 5 Exploration programmes 5% 85% as described in more detail in the footnotes. 6 Innovation and digital transformation projects 5% 85% Sustainability and organisational capabilities 25% 70% 7 Safety – Mining division 5% 100% 8 | People – Diversity and Inclusion Strategy | | 5% 75% | Adjustments are described in more detail | | | --- | --- | --- | --- | --- | | | 9 | | | in the footnotes. | | Environmental performance | | 10% 50% | | | 10 Social performance 5% 75% Total outcome – pre-adjustments 64% Adjustments are described in more detail 11 Adjustment for meeting zero fatality target 10% in the footnotes. 12 Board discretion applied 0% Total outcome – postadjustments 74% 1. The EBITDA targets were adjusted for exchange rate, inflation and copper price fluctuations, and diesel and power price fluctuations, and the effect of one-off bonuses paid on conclusion of labour negotiations at Los Pelambres, Antucoya and Zaldivar, which were not included in the Group’s budget. The targets for EBITDA were adjusted for the impact of the Los Pelambres Concentrate Pipeline Incident in June when there was a temporary reduction in throughput at Los Pelambres due to the reduced concentrate pipeline availability and disruption to access to the mine site, following the assessment by an independent expert which determined that the incident resulted from a factory defect not attributable to the operation's management. 2. 100% basis, except for Zaldívar (50%). The targets for production were adjusted for the impact of the Los Pelambres concentrate pipeline incident. 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). The targets for cash cost were adjusted for the impact of the Los Pelambres Concentrate Pipeline Incident. The figures for corporate expenditure were adjusted for the exchange rate, inflation and the difference between budgeted annual bonus payments and actual bonus payments made to employees. 4. Split between Los Pelambres Desalination Plant (40%), Los Pelambres Concentrator Expansion (27%) and Centinela Second Concentrator (33%). Targets for the Los Pelambres Desalination Plant were related to execution progress and ensuring that there were no material environmental incidents. The threshold (80%) is related to mechanical completion, including pre-commissioning in Q4 2022 and (20%) is due to one serious environmental incident. Target (80%) is related to mechanical completion, including pre-commissioning in Q3 2022, and (20%) is related to non-serious environmental incidents. The maximum (80%) is reached if early pumping is achieved in July 2022 and (20%) if compliance with the approved budget is achieved. Targets for the Los Pelambres Concentrator Expansion were related to execution progress and ensuring that there were no material environmental incidents. With the threshold at (80%) completion of construction in Q4 2022 and (20%) is due to one serious environmental incident. Target at (80%) of mechanical completion, including pre-commissioning in Q4 2022 and (20%) no serious environmental incidents. The maximum (80%) if the commissioning is achieved with an advance of 70% to Q4 2022 and (20%) if compliance with the approved budget is achieved. Targets for the Second Concentrator in Centinela were based on the progress of the engineering and pre-investment studies for the project. With the threshold at (100%) a delay in detailed engineering is greater than or equal to three months. Target at (50%) the recommendation for outsourcing the Desalinated Water Drive System II (SIAM II) in Q3 2022 and (50%) Second Concentrator Project prepared to submit an investment decision request in Q4 2022. The maximum additional critical milestones are reached before the end of the year. The result was 50% of the maximum, made up of 30% of the maximum for the Los Pelambres Desalination Plant, 45% of the maximum for the Los Pelambres Concentrator Expansion and 75% of the maximum for the Centinela Second Concentrator. 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 85% of the maximum. 6. Split between the implementation of the Integrated Remote Operations Management Centres (IROCs) for Los Pelambres and Centinela (33.3%), Data Analytics (33.3%) and continuation of the “New Ways of Working” project (33.3%). Targets for the IROCs were related to the progress of implementation of the IROCs. For the Los Pelambres IROC, the threshold was 60% construction progress, the target was going live in Q4 2022, and the maximum was going live in Q3 2022. Centinela’s IROC threshold was completing the infrastructure in the city of Antofagasta. The target was implementing the integrated model in the mine, concentrator and port, and the maximum was implementing the remote operation of the cathode plant. Data Analytics targets were related to the accumulated impact of the projects implemented in 2022, with a threshold of $32 million, a target of $45 million and a maximum of $55 million in December 2022. Targets for the "New Ways of Working" project related to progress of the approved project plan, with a threshold of 75% progress, a target of 100% progress and a maximum of 100% progress and an evaluation by the CEO and Vice President of Operations of the deployment and evolution of the model. The result was 85% of the maximum, made up of 100% of the maximum for the Los Pelambres and Centinela IROCs, with the Los Pelambres IROC going live in Q3 2022 and the successful remote operation of Centinela’s cathode plant, 100% of the maximum in Data Analytics with a $66 million impact and 50% of the maximum for the “New Ways of Working” project. 7. Performance against a reduction of the High Potential Incident (HPI) rate with a threshold of 0.19, a target of 0.17 and a maximum of 0.16. This metric considers the Lost Time Injury Frequency Rate (LTIFR) as a trigger. If the LTIFR is higher than 1, the maximum achievable score is 50%. The result was 100% of the maximum with an HPI rate of 0.11 and 0.76 frequency rate (LTIFR). 8. Performance against targets for implementation of the Diversity and Inclusion Policy. (50%) of the target was based on the results of an evaluation of the mining division's culture. With a threshold at stay as Tier-2 "emergent," on-target at Tier-4 "collaborative," and maximum at Tier-4 and an evaluation overseen by the CEO and Vice President of Operations. (50% ) of the target was based on an increase in the percentage of female direct employees by the year's end, with the threshold at 17.2%, on-target at 19.3% and maximum at 20.3%. The total score was 75% of the maximum, made up of 100% of the maximum for the percentage of female direct employees, which ended the year at 20.6%, and 50% of the maximum for the culture evaluation. 9. Split between compliance with a regulatory requirements action plan (40%), and implementation of the Climate Change Roadmap (60%). Regulatory requirements action plan: Threshold 85% compliance with the regulatory requirements action plan or an operational event with serious environmental consequences. Target (70%) due to 100% compliance with the regulatory requirements action plan and (30%) achievement of the Copper Mark at Los Pelambres and Antucoya by November 2022. Maximum obtaining the Copper Mark at Los Pelambres and Antucoya by August 2022. Implementation of the Climate Change Roadmap: Threshold of less than 90% compliance with roadmap milestones and 0% reduction in Energy Performance Indicators compared to 2021. Target 100% achievement of roadmap milestones. Maximum is a 1.5% reduction in Energy Performance Indicators compared to 2021 and setting 2023 emissions reduction targets (Scope 3) for two mine equipment supply contracts. The result of the total target was 50% of the maximum. 10. Performance against the planned execution of social initiatives (50%) and a planned programme to measure the impact of the initiatives (50%) with no material or social incidents, with the threshold at 70% implementation of each plan and the maximum at full implementation of the execution plans plus a 3% saving versus budget and an agreed action plan defined to address any gaps in the impact measurement plan. The total outcome was 75% of the maximum. 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 2022, the final Mining Division's outcome was increased by 10% (15% of 64%). 12. No discretion to the bonus outcome was applied, as the adjustment, resulting from the concentrate pipeline incident, was made to the core business metrics: EBITDA, Production and Costs. Antofagasta plc Annual Report 2022156 ### 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. | Effective interaction throughout the year, kept the Board apprised of key developments and responsive to feedback. Actively solicited Directors’ input, ensuring that the Board’s perspectives, ideas and feedback were shared and implemented throughout the Group. | | Leading the Group’s core values and developing a culture of excellence | Strong visible leadership and commitment to the Group’s values, demonstration of desired behaviours and effective leadership of a corporate culture of excellence. Incorporation of a special focus on operational excellence in 2022 through the development of revised full potential limits and aspirational targets. | | Implementing strategy including in relation to long-term growth and the management of environment, social and governance (ESG) matters | Long-term strategic vision to strengthen the Group’s operations and projects. Enhanced the Group’s ESG focus, including implementation of the climate change strategy and accreditation of all four mining companies under the independent Copper Mark audit certification protocols. | | Focusing on the Group’s core business | Strong financial performance in a challenging business environment including record plant throughput at Centinela, the achievement of full potential at Antucoya and the progression of all the Group’s key brownfield growth projects according to plan. | | Developing talent, ensuring appropriate succession planning and performance management | Evident personal commitment to talent management, succession planning and performance management. Successful restructuring of the Operations Vice Presidency and compliance with the Operating Model. | | Pursuing exploration and business development opportunities | Continued progress of the Group’s exploration programme. Business development opportunities thoroughly evaluated and implemented throughout the year including the Group’s exit from the Reko Diq project in Pakistan. | | Promoting the Group’s reputation, working with key stakeholders and local communities | Outstanding stakeholder management including in response to the concentrate pipeline incident and through the new release of the Somos Choapa community engagement programme. Strong contribution to the visibility and reputation of the Company including a strong profile in the international mining industry. | | Addressing business challenges, including diversity and inclusion and innovation | Diversity and inclusion goals achieved ahead of schedule with new stretching goals set during the year. Strong progress in innovation including completion of Centinela’s Remote Integrated Operations Centre in Antofagasta and Los Pelambres’ in Santiago. | ### Performance adjustments, discretion and CEO’s total annual bonus for 2022 Based on Iván Arriagada’s performance achieved against his 2022 targets, the Committee determined that he would receive a bonus payment of $1,704,586. This figure was determined as follows: Overall performance score (70% x 74%) + (30% x 100%) = 81% of the maximum (As a percentage of the maximum) 81% of $2,092,586 Gross annual bonus = $1,704,586 Calculated in US dollars using the exchange rate as of 31 December 2022 of $1 = Ch$855.9 Because the annual bonus is calculated and paid in Chilean pesos, it is subject to exchange rate movements when reported annually in US dollars. The amount of bonus paid was not linked to share price appreciation. Antofagasta plc Annual Report 2022 157 Corporate Governance / 2022 Directors’ and CEO’s Remuneration Report continued Long-term incentives Anticipated vesting in 2023 1 As noted in the single-figure remuneration table on page 157, performance against the Performance Awards granted in 2020 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: | | Weighting | | | | | | Achievement | Discretion | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Measure | % Threshold On-target Maximum Performance | | | | | | % | applied | | Relative total | 50% EMIX Global Mining | | Below | Equal to | ≥5% above | This KPI will vest | 100% No | | | shareholder | | Index performance | index | index | index | on or after 27 | | | | return | | | | | | March 2023. The | | | % Score 0% 33% 100% ESTIMATED estimate is based on a performance of 2 18.4% greater than the index as of 16 Jan 2023. | Mineral | 25% Tonnes of contained | | 84.6m 86.0m 87.4m Resources | | 100% No | | --- | --- | --- | --- | --- | --- | | resources | | copper | | increased to 92.4 | | | increase | | | | million tonnes of | | % Score 0% 50% 100% contained copper as of 31 December 2022. | Project | 12.5% Percentage (%) of | | progress | 75% | 100% | The performance of | 100% No | | --- | --- | --- | --- | --- | --- | --- | --- | | portfolio | | progress in Los | < 50% | progress | progress | the construction of | | | progress | | Pelambres Expansion | | | | the Los Pelambres | | | | | project commissioning | | | | Expansion project | | 3 (INCO) (70%) is 100%. The performance Percentage (%) in for the Zaldívar commissioning for Chloride Leach Zaldivar Chloride project and Phase 2 Leach project (20%) of the Los Environmental impact Pelambres plan for Los Expansion project Pelambres Phase 2 4, 5 is 100%. Expansion (10%). % Score 0% 75% 100% 6 Sustainability 12.5% Agreements reached progress 75% 85% All goals achieved . 100% No commitments with communities < 50% progress progress near the Company’s operations (80%) CO emissions – Not met Partial Full 2 reduction of 300,000 completion completion tonnes and transition away from coal power purchase agreements (20%) % Score 0% 75% 100% 7 Total outcome 100% 1. The number of shares, share price used and the impact of vesting % for this award is available in the notes to the single figure table on page 155 and the table setting out long-term incentive awards outstanding for the CEO from prior periods on page 161. 2. The TSR outcome is an estimate as the performance period ends after this report is published. The actual out-turn will be included in next year’s Annual Report. 3. During the performance period the Committee adjusted targets to remove the impact of exceptional events outside of management control. Los Pelambres Expansion project’s construction progress target was amended for delay attributed to COVID-19 and the enabling works added to allow for the future expansion of the desalination plant from 400 l/s to 800 l/s, approved after this target was set in 2020. Additionally, the Committee considered the level of vesting and progress of the projects at the end of the performance period and were satisfied that the level of vesting reflected progress made given external factors that delayed progress. 4. Construction and commissioning were completed in the first quarter of 2022. 5. The project’s scope was redefined by the Board to include the Los Pelambres Mine Life Extension project. The EIA was submitted in 2021 and achieved its targets during 2022. 6. One hundred percent (100%) compliance means agreements reached with the communities near the Company’s operations, 100% compliance with commitments and agreements, and CO emissions reduction following forecasts set on the grant date, and the conversion of the electricity supply contracts to 100% renewable power. 2 7. The impact of this vesting level on the CEO’s 2022 remuneration is set out in footnote 5 of the CEO single-figure total remuneration table on page 155. Performance adjustments and discretion No discretion has been applied to any of the performance calculations for the 2020 LTIP outcome. As stated in notes to the table above the Committee adjusted the projects targets during the performance period to reflect the change in the project scope and issues outside of management control. Antofagasta plc Annual Report 2022158 ## Directors’ single figure ## of remuneration (audited) The Directors’ remuneration for 2022 and 2021 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 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2022 | | 2021 | 2022 | | 2021 | 2022 | | | 2021 | | $000 | | $000 | $000 | | $000 | $000 | | | $000 | Chairman Jean-Paul Luksic 1,015 1,012 16 16 1,031 1,028 Non-Executive Directors Ollie Oliveira (departed 31 July 2021) – 210 – 1 – 211 1 Ramón Jara 927 965 85 7 1,012 972 Juan Claro 280 278 3 2 283 280 Andrónico Luksic C 260 260 3 2 263 262 Vivianne Blanlot 325 318 3 2 328 320 Jorge Bande 320 314 13 2 333 316 Francisca Castro 315 309 21 2 336 311 Michael Anglin 335 311 7 – 342 311 Tony Jensen 365 333 12 – 377 333 Eugenia Parot (appointed 20 April 2021) 300 199 6 – 306 199 Total Board 4,442 4,509 169 34 4,611 4,543 1. During 2022, $604,079 (2021 – $645,053) was paid to Asesorías Ramón F, Jara Ltda, for providing services. The reported decrease is due to an increase in the Ch$/USD exchange rate, partially offset by an annual adjustment for inflation in Chile. These payments are included in the fees attributable to Ramón Jara shown above. 2. Amounts for Jean-Paul Luksic include the provision of life, health and terrorism insurance. Amounts for Ramón Jara include the provision of life and terrorism insurances. These insurances are not in place 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 meetings and the Company’s Annual General Meeting in London. 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 2021 can be found on page 152 of the 2021 annual report. These remain unchanged. Payments to former Directors (audited) There have been no changes to the Directors’ interests in the shares There were no payments made to past Directors. of the Company between 31 December 2022 and the date of this report. The Directors and CEO had no interests in the shares of the Company Payments for loss of office (audited) during the year other than those set out on this page. No Director had There were no payments made for loss of office. any material interest in any contract (other than a service contract in the Total pension entitlements (audited) case of Ramón Jara) with the Company or its subsidiary undertakings There were no pension contribution payments made towards any during the year other than in the ordinary course of business. Directors or towards the CEO. The Group does not have shareholding guidelines or requirements Directors and CEO’s shareholding and share interests (audited) for Directors, all of whom are Non-Executives. The Directors who held office on 31 December 2022 had the following The Chairman, Mr Jean-Paul Luksic, and Non-Executive Director, interests in the ordinary shares of the Company: Mr Andrónico Luksic C, are members of the Luksic family. Members Ordinary shares of 5p each of the Luksic family are interested in the E. Abaroa Foundation, which 31 December 1 January controls Metalinvest Establishment and Kupferberg Establishment 2022 2022 (which, taken together, holds approximately 60.66% of the Company’s 1 Jean-Paul Luksic 41,963,110 41,963,110 ordinary shares and approximately 94.12% of the Company’s Tony Jensen – – preference shares). In addition, Mr Jean-Paul Luksic controls the 2 Severe Studere Foundation, which, in turn, controls the Aureberg Ramón Jara 5,260 5,260 Establishment (which holds approximately 4.26% of the Company’s Juan Claro – – ordinary shares). This creates significant alignment between these Andrónico Luksic C – – members of the Board and shareholders. Vivianne Blanlot – – During the period, no Non-Executive Director was eligible for any Jorge Bande – – short-term or long-term incentive awards, and no Non-Executive Francisca Castro – – Director owns any shares as a result of the achievement of performance Michael Anglin – – conditions. 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 held by a close family member. Antofagasta plc Annual Report 2022 159 Corporate Governance / 2022 Directors’ and CEO’s Remuneration Report continued ## Other relevant information 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. Number of shares/ Award as % Face value (market Type of award Date of grant options of salary 1 value at date of grant) Performance period Vesting dates Restricted Award 29 Mar 22 22,578 60% $520,220 N/A 29 Mar 23 29 Mar 24 29 Mar 25 Performance 29 Mar 22 52,686 140% $1,213,848 29 Mar 2022 to 29 Mar 25 Award 29 Mar 2025 1. The number of awards was calculated according to the base salary at the grant date on 29 March 2022 with the total face value described in the table. The share price used to value these awards is £17.47/share, USD/GBP 1.32 and the exchange rate used to value this award is CLP/USD 792,38 all of them calculated as the average of the closing price during a period of 5 dealing days ending with the dealing day before the grant date, according to policy. Performance conditions attaching to long-term incentive plan awards granted to the CEO in 2022 (audited) | | | | | | Vesting | Vesting | Vesting | | --- | --- | --- | --- | --- | --- | --- | --- | | Objective Weighting Threshold Target Maximum | | | | | at threshold | at target | at maximum | | Relative total shareholder return | 50% Performance | | Equal | ≥ 5% above index 0% 33% 100% | | | | | vs. Global X Copper Miners ETF | | below index | to index | | | | | (CopX Index) | Mineral resources increase | 25% 83.1m tonnes 86.4m | | | 87.5m tonnes 0% 50% 100% | | | --- | --- | --- | --- | --- | --- | | (contained copper) | | | tonnes | | | | Projects portfolio: | 12.5% 50% | | 75% | Full completion of goals | 0% 75% 100% | | | | completion | completion | | | | (1) Los Pelambres Concentrate | | | | (1) and (2) with an | | | Pipeline (30%) | | | | environmental impact study | | approved and under (2) Los Pelambres Desalination construction. Plant Expansion (40%) (3) With progress in the range (3) Centinela Second (of 85% – 100%) of the Concentrator (30%) approved plan. Environmental (1) Social 12.5% Greater than Greater than Greater than or equal 0% 75% 100% 1 and social Management 50% 75% to 85% compliance commitments Plan (40%) compliance compliance | (2) Climate | 50% | 75% | One hundred per cent | 0% 75% 100% | | --- | --- | --- | --- | --- | | change and | compliance | compliance | (100%) compliance with the | | | environment | | | emissions budget according to | | | (60%) | | | the 2024 emissions reduction | | target; overall reduction of one million tonnes of Scope 1 and Scope 2 CO emissions by 2 2024, compared to the 2021 level. 85 to 100% compliance with the roadmap of the climate change strategy and circular economy strategy. Score 75% + 100% compliance with extreme, high and moderate risk regulatory requirements. 1. Compliance with initiatives in the Group’s social management plan, including initiatives existing as of 31 March 2022 and added before 31 December 2024, on time and within 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. Antofagasta plc Annual Report 2022160 Long-term incentive plan awards outstanding for the CEO from prior periods (audited) 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. | | | Number of awards | Under award as at | | --- | --- | --- | --- | | Year of grant Type of award Date of grant | | as at start of year Vested during year Lapsed during year | 31 December 2022 Vesting date | | 2020 Performance | 27 Mar 20 105,295 N/A 0 105,295 27 Mar 23 | | | Awards 2020 Restricted 27 Mar 20 30,084 15,042 0 27 Mar 22 Awards 15,042 27 Mar 23 2021 Performance 29 Mar 21 39,442 N/A 0 39,442 29 Mar 24 Awards 2021 Restricted 29 Mar 21 16,905 5,635 0 29 Mar 22 Awards | | | 5,635 | 29 Mar 23 | | --- | --- | --- | --- | | | | 5,635 | 29 Mar 24 | | 2022 Performance | 29 Mar 22 52,686 N/A 0 52,686 29 Mar 25 | | | Awards 2022 Restricted 29 Mar 22 22,578 0 0 7,256 29 Mar 23 Awards 7,256 29 Mar 24 7,256 29 Mar 25 The performance conditions and face values at grant for the awards granted in 2020 and 2021 are set out in the annual reports for 2020 and 2021. No variations to the original terms of the awards have been made. Restricted Awards are not subject to performance conditions. 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 remuneration for the Group’s lead executive 2013 2014 1 2015 2016 2 2017 2018 2019 2020 2021 4 2022 Chairman – Jean-Paul Luksic ($000) 3,615 2,196 – – – – – – – – CEO – Diego Hernández ($000) – 688 2,445 1,525 – – – – – – CEO – Iván Arriagada ($000) – – – 681 1,790 2,513 2,458 4,675 4,134 4,808 Annual bonus pay-out (% of maximum) – 69% 39% 61% 79% 66% 83% 93% 72% 81% 3 LTIP pay-out (% of maximum) – 76% 16% – 85% 60% 65% 99% 99% 100% 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. 2021 figures have been restated to reflect actual 2021 outcomes, as explained in the CEO single-figure remuneration table on page 155. 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 160. 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 2012 compared with £100 invested in the comparative indices. 200 150 100 50 0 Dec 22Dec 21Dec 20Dec 19Dec 18Dec 17Dec 16Dec 15Dec 14Dec 13Dec 12 Antofagasta FTSE All-Share Global X Copper Miners ETF Antofagasta plc Annual Report 2022 161 Corporate Governance / 2022 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. 2022 2021 2020 Fees/base Annual Fees/base Annual Fees/base Annual salary Benefits 5 bonus salary Benefits 5 bonus salary Benefits 5 bonus 1 Non-Executive Directors Jean-Paul Luksic 0% -5% N/A 1% 15% N/A 0% 28% N/A Ollie Oliveira (departed 31 July 2021) N/A 0% N/A 8% -87% N/A 0% -91% N/A Ramón Jara -4% 1,054% N/A 7% 2% N/A -4.3% 17% N/A Juan Claro 1% 9% N/A 2% -32% N/A 0% -64% N/A Andrónico Luksic C 0% 9% N/A 0% -32% N/A 0% 23% N/A Vivianne Blanlot 2% 9% N/A 4% -32% N/A 0% -45% N/A Jorge Bande 2% 452% N/A 6% -32% N/A 0% -63% N/A Francisca Castro 2% 771% N/A 6% -73% N/A 1% -29% N/A 5 Michael Anglin 8% – N/A 9% – N/A 1% -75% N/A 6 Tony Jensen (appointed 13 March 2020) 10% – N/A 34% – N/A – – N/A 7 Eugenia Parot (appointed 20 April 2021) 5% – N/A N/A N/A N/A N/A N/A N/A CEO 10.4% 218% 38.5% 28.3% 51.5% -5.7% -8% -65% 38.8% 2 | Company employees | | -10.3% 2.2% -27.0% 1.6% -0.3% 19.7% 1.8% 19.9% 7.5% | | | | --- | --- | --- | --- | --- | | | 3 | | 4 | | | Mining division employees | | -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. 2. We do not consider this comparator group to be relevant, considering more than 99.9% of employees are not included. The parent Company, Antofagasta plc, has fewer than ten employees. Reporting these figures is mandatory. 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. 4. Chilean employees are paid in chilean Pesos. In chilean pesos terms, the average base salary for mining division employees changed in a 8.2%. The figure reported in US dollars is negative due to an increase in the Chilean peso/US dollar exchange rate, partially offset by an annual inflation adjustment in Chile. 5. There has been a small minor update to the methodology applied for reporting Directors’ benefits which has resulted in the restatement of the Directors’ benefits figures for 2020. Directors’ benefits for 2020, 2021 and 2022 are all reported in accordance with footnote 3 at the Directors’ single figure of remuneration on page 159. The relative importance of remuneration expenditure The table below shows the total expenditure on employee remuneration, the distributions to shareholders and tax expenses in 2021 and 2022. 2022 2021 Percentage $m $m change 1 Employee remuneration 476.6 498.0 -4.3% 2 Distributions to shareholders 588.3 1,404.4 -58.1% 3 Taxation 448.8 1,035.5 -56.7% 1. Employee remuneration includes salaries and social security costs, as set out in Note 9B to the financial statements. 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. CEO pay ratio Antofagasta has its main operations in Chile and has fewer than 10 employees in the UK. Consequently, whilst the Committee considers employee pay as part of its decision making on Director and CEO pay, there is no requirement to disclose a CEO pay ratio. Antofagasta plc Annual Report 2022162 ## Remuneration and Talent Management ## Committee Report 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. 2022 Remuneration and Talent Management Committee activities The critical matters considered by the Committee are set out in the table below: Jan 22 Mar 22 (x2) Aug 22 Oct 22 1 Nov 22 Directors’ and Executive Remuneration and Governance 2021 annual bonus and LTIP • • • 2022 annual bonus and LTIP • • • Review of Remuneration Policy • • Review of total shareholder return performance • Review of 2021 performance appraisal CEO • • and Executive Committee individual performance Directors’ Remuneration Report • • Annual General Meeting season governance update • LTIP governance • Executive benefits • 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 • • Engagement survey results • • 2023 Mining division scorecard • 1. The Committee held a stand-alone session to discuss the outcomes of Engagement survey. Committee’s activities during the year | Executive remuneration | 40% | | --- | --- | | Director remuneration | 7% | | Pay-related governance | 18% | | Workforce | 30% | and HR policies Talent management 5% and succession Antofagasta plc Annual Report 2022 163 Corporate Governance / Remuneration and Talent Management Committee Report continued Engagement with colleagues In 2021, the Committee took note of the views of the workforce in As explained in last year’s Annual Report, when the Committee reviews adjusting KPI weightings in the Annual Bonus Plan. It also oversaw the the Directors’ and the CEO’s remuneration, it considers pay conditions implementation of ‘New Ways of Working’ for employees, providing more across the Group. This is set in the context of different working flexibility and adaptability after extensive engagement with the workforce. environments and geographies and therefore is not a mechanical This policy applies to the CEO, senior management and employees. process. The Company does not have any executive directors, and the Additionally, with its advisers, the Group reviewed the market practice executive pay policy that applies to the CEO (who is not a Director) is the and considered the developing environment for talent and the needs of same as the Group’s broader pay policy. This policy includes access the business before making proposals to the Committee across several to the same benefits and participation in the same Annual Bonus Plan. areas impacting the reward and talent proposition for employees. The Members of the Executive Committee and certain key executives proposals sought to continue to maximise value, increase the overall participate in the LTIP, and this plan is the same for the CEO as for employee experience, and ensure that the Group remains a world-class the other participants. The same principles apply to our workforce employer, attracting and retaining the best talent to succeed. remuneration plans as to that of the CEO, seeking to drive the same aligned culture, values and behaviours across the Group. Consideration by the Directors of matters relating to Directors’ remuneration Approximately 80% of the Group’s employees are unionised, and the During the year, the Committee reappointed Willis Towers Watson to number is close to 100% at the operator level. The Committee reviews advise the Committee on remuneration issues. This reappointment was the gender pay gap, CEO pay ratio figures and a range of other internal based on the Committee’s satisfaction with advice provided in previous and external remuneration comparison metrics and benchmarks when years. The Committee is satisfied that the advice provided by Willis determining the quantum and structure of the CEO’s remuneration. This Towers Watson was objective and independent and that no conflict includes feedback from shareholders and more general feedback from of interest arose concerning these services. Willis Towers Watson’s fees employees on the Group’s pay policies, including regular engagement for this work were charged in accordance with time and materials and with union representatives and oversight of the parameters for collective amounted to £102,192. Willis Towers Watson also provided advice and bargaining negotiations. support to management during the year, primarily on general The Committee communicates with and receives feedback from the remuneration issues, benchmarking, best HR practices and ad hoc workforce through a variety of channels, including employee advice on topics such as equality and gender remuneration. engagement surveys carried out during October and November 2021 In determining that the advice received was independent, the Committee at Antofagasta Minerals and Minera Antucoya and in July 2022 at took into account the fact that Willis Towers Watson is an independent Centinela, Los Pelambres and Zaldívar. The results are shared with the global professional services firm that adheres to the Code of Conduct for Committee and the Board. The Group also conducts ad hoc focused Remuneration Consultants, to which it is a signatory. The Code of surveys on specific issues, which in 2022 included surveys on New Conduct can be found at www.remunerationconsultantsgroup.com. Ways of Working, employee wellbeing, and diversity and inclusion. The results of the surveys were also shared with the Committee During 2022, the Committee also received assistance from and the Board. the Chairman, Jean-Paul Luksic, the CEO, Iván Arriagada, the Vice President of Human Resources, Georgeanne Barceló, and the The Committee is regularly updated on workforce pay and benefits by Company Secretary, Julian Anderson, none of whom participated the senior management team, who consult with the workforce on issues in discussions relating to their own remuneration. Additionally, part including the remuneration policy. The workforce receives regular of each Committee meeting is held without management present to communications throughout the year on the Group’s performance ensure that individual views or areas of concern can be debated targets and incentive awards, while the senior management team between Committee members. receives regular feedback on the performance of workforce roles and regularly engages with employees to understand their views on The responsibilities of the Committee are defined by its Terms workforce remuneration policy and practices. of Reference, which can be found on the Company’s website. Directors visit Group operations throughout the year, individually Talent management and succession planning or in small groups, to listen directly to employees’ views on labour Oversight of talent management and succession planning is integral to issues, including remuneration, culture and values, as well as the the Committee’s responsibilities and directly relates to the Group’s ability application of remuneration policy across the Group, including executive to achieve long-term sustainable success. The talent review is carried pay. The Board's engagement with the workforce is detailed on pages out annually to update succession planning for key positions, identify 116 and 117. talent pools, define individual development plans and agree on Consequently, the Committee has multiple touchpoints with the recruitment needs. workforce for feedback on the Group’s workforce remuneration policy, In recent years a new approach has been taken, prioritising employees’ including senior management and the CEO. At the beginning of every overall experience and positioning the Group as a top-tier employer Committee meeting, the CEO provides an update to the Committee on capable of attracting and retaining top talent. Talent Management is key workforce issues relating to remuneration and talent. The Committee critical to ensuring the Group's ability to meet current and future meetings are focused on these subjects. Following each Committee business demands by focusing on the attraction, retention and meeting, the Committee Chair reports a summary of matters considered development of high-potential individuals. This approach ensures the to the full Board. continuous growth and success of the Company. 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 2022164 / Implementation of the Directors' and CEO's remuneration policy in 2023 # Implementation of the CEO's remuneration policy in 2023 ## Base salary The CEO's annual base salary will be $1,255,552 from 1 January 2023. This represents a 20% increase in his pay as at December 2022 and represents a market and performance adjustment determined by the Committee. The Chilean peso/US dollar exchange rate will continue to be monitored and may, if the Committee considers this appropriate, result in changes to pay during 2023. ## Benefits Benefits will be provided in line with the 2023 Policy. ## Annual bonus for 2023 Assuming it is approved, the operation of the bonus for 2023 will be in line with the 2023 Policy submitted for approval at the 2023 AGM. Bonus measures, weightings and targets have been updated for 2023 in response to a review of our strategic priorities for the forthcoming year. The approach to calculating the targets and outcomes will reflect the 2022 bonus plan. During 2023, in order to move towards a simpler and effective scorecard, corporate expenditure has been removed from the core business metrics and the associated weight added to the EBITDA as the corporate expenditure directly impacts EBITDA. Also, as safety and health of our employees is our top priority, we have added occupational hazards risks to our safety metrics. The performance targets which are not commercially sensitive are set out below. The remaining targets will be disclosed retrospectively. | Measure | Weighting | Threshold (0% pay-out) | On-target (50% pay-out) | Maximum (100% pay-out) | | --- | --- | --- | --- | --- | | **Core business** | **50%** | | | | | EBITDA^{1} – Mining division ($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 2023 target and outcome in the 2023 Annual Report. | ≥+10% | | Copper production (kt)^{2} | 22% | 651.0 | 671.7-692.5 | 702.9 | | Cash costs before by-product credits ($/lb)^{3} | 13% | 2.28 | 2.15 | 2.02 | | **Business development** | **25%** | | | | | Growth projects^{4} | 15% | Measured according to the schedule and budget as described in more detail in the footnotes. | | | | Exploration programmes^{5} | 5% | | | | | Innovation and digital transformation projects^{6} | 5% | | | | | **Sustainability and organisational capabilities** | **25%** | | | | | Safety – Mining division^{7} | 5% | Measured according to the schedule and budget as described in more detail in the footnotes. | | | | People – Diversity and Inclusion Strategy^{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 Zaldivar (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. Progress of growing projects according to predefined milestones. Split between Los Pelambres Expansion project (27%), Los Pelambres Desalination Plant Expansion, Concentrate Pipeline and mine life expansion projects (13%), the Implementation of Zaldivar's Business Continuity Strategy (27%) and the Centinela Second Concentrator Detailed Engineering Project (33%). 5. Maximum and on-target are defined according to the progress of a planned exploration programme for one exploration target previously discovered to have potential mineralisation and the consolidation of exploration ownership interests, including infill drilling campaigns and increasing the mineral resources inventory. 6. Split between compliance with Integrated Remote Operation Centres value levers KPIs for Centinela and Los Pelambres (50%) and Data Analytics Impact (measured as the cumulative US dollar annual savings of all implemented data analytics projects) (50%). 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 20.6% female direct employees, on-target at 22% female direct employees and maximum at 23.1% female direct employees and D&I Roadmap implementation. A 15% negative trigger applies if the overall target of 1% of people with disabilities is not met. 9. Split between environmental commitments (40%) and the implementation of the Group's climate change roadmap (60%), this metric considers: Development of the Final Stage of the Decarbonisation Plan of AMSA, Incorporation of the selected scenario in the 2022 Stage of the Decarbonisation Plan in the annual mining planning process, Goal definition of Scope 3 emissions and Definition of the Offset (compensation) Strategy. 10. Compliance with critical initiatives and measurement of impact according to the defined social project portfolio. Antofagasta plc Annual Report 2022 165 Corporate Governance / Implementation of the Directors' and CEO's remuneration policy in 2023 continued # LTIP for 2023 The operation of the LTIP for 2023 will be in line with the Remuneration 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 Performance Awards measures, weightings and objectives are set out in the table below. | Weighting | Objective | Measure^{1} | | --- | --- | --- | | 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 2025 financial year's end. | | 25% | Mineral resources increase | Maximum is 88.1 million tonnes of contained copper, with an on-target and a threshold of 86.2 and 83.6 million tonnes, respectively, as of 31 December 2025. | | 12.5% | Projects' performance | The maximum is achievable if the Los Pelambres Concentrate Pipeline (20%) and Desalination Plant Expansion (15%) and Centinela's Second Concentrator (45%) construction progress is 75% or more of their approved plans and Zaldivar's Operational Continuity Solution (20%). | | 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 2023 and added before 31 December 2025, 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 average score of all initiatives. 2. Climate change and environment (60%). Maximum is achievable for compliance with Decarbonisation Roadmap plan at 75%, the water efficiency target by 2025, 100% compliance with the Circular Economy Strategy Roadmap and compliance with the internal plan to address regulatory requirements. | 1. The final LTIP 2023 scorecard measures will be approved after this report is published. 166 Antofagasta plc Annual Report 2022 # Implementation of the Directors' remuneration policy in 2023 Chairman Jean-Paul Luksic's total fee for 2023 is $1,015,000, (2022 – $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 2023 Policy. Benefits that were reported for 2022 will continue to apply. Directors are not expected to receive any other remuneration in 2023. The fees payable for Committee roles and the role of Senior Independent Director from January 2023 are set out below: Additional Director fees payable from 1 January 2023 | Role | Additional fees $ | | --- | --- | | 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 | AGM voting history | | 2021 Directors' and CEO's Annual Report on Remuneration | | --- | --- | | Votes for | 97.43% 1,059,688,617 | | Votes against | 2.57% 27,903,201 | | Votes cast as a percentage of issued share capital | 91.71% | | Votes withheld | 5,663,353 | | | Resolution to approve the 2020 Directors' and CEO's Remuneration Policy | | --- | --- | | Votes for | 98.17% 1,062,750,494 | | Votes against | 1.83% 19,832,684 | | Votes cast as a percentage of issued share capital | 91.29% | | Votes withheld | 16,811 | 1. Meeting dated at 16th March 2020. Results were at 20th May 2020 press release. 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 Antofagasta plc Annual Report 2022 167 Corporate Governance / Directors' Report # 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 118-120. Post-balance sheet events There have been no post-balance sheet events. Financial risk management Details of the Company's policies on financial risk management are set out in Note 25 to the financial statements. Results and dividends The consolidated profit before tax has decreased from $3,477.1 million in 2021 to $2,558.9 million in 2022. The Board has recommended a final dividend of 50.5 cents per ordinary share (2021 – 118.9 cents). An interim dividend of 9.2 cents was paid on 30 September 2022 (2021 interim dividend – 23.6 cents). This gives total dividends per share proposed in relation to 2022 of 59.7 cents (2021 – 142.5 cents) equivalent to a total dividend amount of $588.3 million (2021 – $1,404.8 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 (2021 – $0.1 million). Further information relating to dividends is set out in the Financial Review on page 99 and in Note 13 to the financial statements. Political contributions The Group did not make any political donations during the year ended 31 December 2022 (2021 – nil). Auditor The Company's auditor, PricewaterhouseCoopers LLP, has indicated its willingness to continue in office and a resolution seeking its reappointment 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 30 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 23 to the financial statements. The preference shares are non-redeemable and are entitled to a fixed cumulative dividend of 5% 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% | 168 Antofagasta plc Annual Report 2022 ### Authority to issue shares and authority to purchase own shares At the AGM held on 11 May 2022, 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 10 May 2023. 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. Further special resolutions passed at the 2022 AGM granted authority to the Directors to allot equity securities in the Company for cash up to an aggregate nominal amount of £2,464,641 (representing 5% of its issued ordinary share capital) without regard to the pre-emption provisions of the Companies Act 2006 and for an additional aggregate nominal amount of £2,464,641 (representing an additional 5% of its issued ordinary share capital) in connection with the financing or refinancing of an acquisition or specified capital investment. These authorities also expire on the date of this year's AGM. Since the 2022 AGM, the Pre-Emption Group's Statement of Principles and the Investment Association's guidance have been updated and permit companies to each of these authorities for up to a 10% of its issued ordinary share capital (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). Accordingly, the Directors will seek to renew these authorities at the increased level 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 2022 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 2022, 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 159) 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 2022, 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 36 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. No interests have been disclosed to the Company between 31 December 2022 and the date of this report. ### 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. Antofagasta plc Annual Report 2022 169 Corporate Governance / Directors' Report *continued* # **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 37. # **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 40-73 of the Strategic Report and pages 102-171 of the Corporate Governance Report. # **Other statutory disclosures** The Corporate Governance Report on pages 102-171, the Statement of Directors' responsibilities on page 171 and Note 25 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 86-89 | | Viability statement | Page 37 | | Subsidiaries, associates and joint ventures | Pages 74-85 | | Employee engagement | Pages 48-50 | | Greenhouse gas emissions | Pages 61-62 | | Streamlined energy and carbon reporting | Pages 61-62 | 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 142-167 and Note 26 to the financial statements. | | Relationship agreement (LR 9.8.4(14)) | Page 109 | By order of the Board Company Secretary 23 March 2023 170 Antofagasta plc Annual Report 2022 / Statement of Directors’ responsibilities ## Statement of Directors’ responsibilities ## in respect of the financial statements The Directors are responsible for preparing the Annual Report and Financial Directors’ confirmations Statements 2022 in accordance with applicable law and regulation. The Directors consider that the Annual Report and Financial Statements 2022 and accounts, taken as a whole, is fair, balanced and understandable Company law requires the Directors to prepare financial statements for and provides the information necessary for shareholders to assess the each financial year. Under that law the Directors have prepared the Group’s and parent company’s position and performance, business Group financial statements in accordance with UK-adopted international model and strategy. accounting standards and the parent Company financial statements in accordance with United Kingdom Generally Accepted Accounting Each of the Directors, whose names and functions are listed in the Practice (United Kingdom Accounting Standards, comprising FRS 101 Corporate Governance Report confirm that, to the best of their “Reduced Disclosure Framework”, and applicable law). knowledge: Under Company law, Directors must not approve the financial • the Group financial statements, which have been prepared in statements unless they are satisfied that they give a true and fair view accordance with UK-adopted international accounting standards, give of the state of affairs of the Group and parent Company and of the profit a true and fair view of the assets, liabilities, financial position and profit or loss of the Group for that period. In preparing the financial statements, of the Group; the Directors are required to: • the Parent Company financial statements, which have been prepared in accordance with United Kingdom Accounting Standards, • select suitable accounting policies and then apply them consistently; comprising FRS 101, give a true and fair view of the assets, liabilities • state whether applicable UK-adopted international accounting and financial position of the Parent Company; and standards have been followed for the Group financial statements • the Strategic Report includes a fair review of the development and and United Kingdom Accounting Standards, comprising FRS 101, performance of the business and the position of the Group and Parent have been followed for the parent Company financial statements, Company, together with a description of the principal risks and subject to any material departures disclosed and explained in the uncertainties that it faces. financial statements; • make judgements and accounting estimates that are reasonable In the case of each director in office at the date the directors’ report and prudent; and is approved: • prepare the financial statements on the going concern basis unless • so far as the Director is aware, there is no relevant audit information it is inappropriate to presume that the Group and parent Company of which the Group and Parent Company’s auditors are unaware; and will continue in business. • they have taken all the steps that they ought to have taken as a The Directors are responsible for safeguarding the assets of the Group director in order to make themselves aware of any relevant audit and parent Company and hence for taking reasonable steps for the information and to establish that the Group and Parent company’s prevention and detection of fraud and other irregularities. auditors are aware of that information. The Directors are also responsible for keeping adequate accounting By order of the Board 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 Jean-Paul Luksic Tony Jensen them to ensure that the financial statements and the Directors’ Chairman Senior Independent Remuneration Report comply with the Companies Act 2006. Director The Directors are responsible for the maintenance and integrity of the 23 March 2023 parent company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Antofagasta plc Annual Report 2022 171 Financial Statements ## Financial ## Performance Independent auditors’ report 174 Consolidated income statement 181 Consolidated statement of comprehensive income 182 Consolidated statement | of changes in equity | 182 | | --- | --- | | Consolidated balance sheet | 183 | | Consolidated cash flow statement | 184 | | Notes to the financial statements | 185 | Parent Company financial statements 234 172 Antofagasta plc Annual Report 2022172 ## Continuing to deliver ## strong returns while ## maintaining a robust ## financial position. 173Antofagasta plc Annual Report 2022 Financial Statements # Independent auditors' report to the members of Antofagasta plc ## 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 2022 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 2022 (the "Annual Report"), which comprise: the consolidated and Parent Company balance sheets as at 31 December 2022; 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, which include a description of the significant accounting policies. 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 (2021: 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 (2021: 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 and other items 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 Zaldivar and Antucoya cash generating units (Group) and investments in subsidiaries (Parent) (Group and Parent) - The accounting for the disposal of the Group's interest in the Reko Diq project (Group) Materiality - Overall Group materiality: $112 million (2021: $108 million) based on 5% of the three year average of profit before tax adjusted for one-off items. - Overall Parent Company materiality: $20 million (2021: $26.5 million) based on 1% of total assets. - Performance materiality: $84 million (2021: $81 million) (Group) and $15 million (2021: $19.875 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) is a new key audit matter this year. The assessment of indicators of impairment and impairment reversal was a key audit matter in the prior year, albeit the specific areas of focus of our audit work differed this year compared with last year. 174 Antofagasta plc Annual Report 2022 #### Key audit matter *Assessment of indicators of impairment and impairment reversal for property, plant and equipment, in particular in respect of the Zaldivar and Antucoya cash generating units (Group) and investments in subsidiaries (Parent) (Group and Parent)* 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 2022 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 2022 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 trigger 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 Zaldivar that the ongoing renewal of mining and water permits, currently due to expire in 2024 and 2025 respectively, will be successful. Refer to notes 3 and 5 to the Group financial statements and the Audit and Risk Committee's views set out on pages 131 and 132. As at 31 December 2022, the Parent Company holds investments in subsidiaries amounting to \$589.1 million (2021: \$529.1 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 triggers exist in relation to the shares held in subsidiaries and, where triggers 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 triggers, 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 indicative of a trigger. 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 triggers 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. #### How our audit addressed the key audit matter We assessed the Directors' conclusion that there were no indicators of impairment or impairment reversal as at 31 December 2022. Our procedures included evaluating management's trigger assessment, including its completeness by reference to both internal and external factors, including but not limited to operational performance in the year, potential changes in the Chilean mining royalty regime, 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 Zaldivar, 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 assessed the impact of incorporating estimates of the potential future costs relating to climate change risks, based on the Task Force on Climate-related Financial Disclosures ('TCFD') scenario analyses prepared by management during the year, into these quantitative impairment indicator assessments. 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 triggers; independently performed an assessment of other potential internal and external impairment triggers, 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. As a result of our work, we were satisfied that the carrying value of the Parent Company's investments in subsidiaries is appropriate as at 31 December 2022. Antofagasta plc Annual Report 2022 175 Financial Statements / Independent auditors’ report to the members of Antofagasta plc continued Key audit matter How our audit addressed the key audit matter The accounting for the disposal of the Group’s interest in the Reko Diq We assessed management’s analysis of the accounting for the definitive project (Group) agreements and considered potential alternative interpretations. We read the definitive agreements and confirmed that the contractual On 15 December 2022 Antofagasta entered into definitive agreements arrangements supported the Directors’ judgements. to exit its interest in the Tethyan joint venture. The Directors determined that, as a result of the agreements, the Group no longer has joint We read the tax advice obtained by management in respect of the control of the joint venture and has, therefore, derecognised its transaction, and have assessed the independence, competence and investment and recognised a gain on disposal of $944.7 million, objectivity of management’s external tax experts. We also engaged our representing the proceeds of the divestment net of related adjustments. internal tax experts to review the advice to help us assess the appropriateness of management’s estimate in respect of tax. The Directors have applied judgement in determining that, under the agreements, the Group no longer has joint control of the Tethyan joint We read the related disclosures in respect of the transaction in note 17 to venture and has an unconditional right to receive the proceeds of the the Group financial statements and in respect of the significant estimation sale, currently held by Atacama. Judgement has also been applied in uncertainty in note 3. estimating the probability of the sales proceeds being subject to We identified no material issues as a result of our work. Australian tax. As this is an area which had a significant effect on our overall audit strategy and the allocation of resources in the planning for, and completion of, our audit, this was determined to be a key audit matter. Refer to notes 3 and 17 to the Group financial statements and the Audit and Risk Committee’s views set out on page 132. How we tailored the audit scope statements. The Group engagement team also performed procedures in We tailored the scope of our audit to ensure that we performed enough respect of the gain on disposal of the investment in the Tethyan joint work to be able to give an opinion on the financial statements as a venture. For all other components, the Group team performed analytical whole, taking into account the structure of the Group and the Parent review procedures. Company, the accounting processes and controls, and the industry in Where work was performed by component auditors, we determined the which they operate. level of involvement we needed to have in the audit work to be able to The core mining business comprises four mining operations: Los conclude whether sufficient appropriate audit evidence had been Pelambres; Centinela; Antucoya; and Zaldívar, a joint venture with obtained as a basis for our opinion on the Group financial statements as Barrick Gold Corporation operated by the Group. These mines produce a whole. Our oversight procedures included the issuance of formal, copper cathodes, copper concentrates and significant volumes of written instructions to the component auditors setting out the work to be by-products. performed, regular communication throughout the audit cycle including regular component meetings, review of component auditor workpapers In addition to mining, the Group has a transport division that provides rail and participation in audit clearance meetings. In most cases and road cargo services in northern Chile, predominantly to mining communication was performed through video conferencing. However, customers, including to the Group’s own operations. members of the Group team also visited Chile on multiple occasions All of the above operations are located in Chile. In addition, the Group during the audit. The Group team also reviewed the component auditor has corporate head offices located in both Santiago, Chile (Antofagasta working papers and reviewed other communications dealing with Minerals S.A.) and London, UK (Antofagasta plc). The Group also has significant accounting and auditing issues. exploration projects in various countries. Taken together, the components where we performed our audit work In establishing the overall approach to the Group audit, we determined accounted for 97% of consolidated revenue, 94% of consolidated profit the type of work that needed to be performed at each of the four mine before tax and 92% of consolidated profit before tax adjusted for one-off sites and the corporate offices in Chile, by us, as the Group engagement items. This was before considering the contribution to our audit evidence team and by component auditors from PwC Chile operating under our from performing additional audit work at the Group level, including instruction. Los Pelambres and Centinela were considered to be disaggregated analytical review procedures, which covers a significant financially significant components of the Group, due to their contribution portion of the Group’s smaller and lower risk components that were not towards Group profit before tax, and so required audits of their complete directly included in our Group audit scope. financial information. Antucoya and Zaldívar, as well as the Parent The Parent Company financial statements are prepared in the corporate Company Antofagasta plc, were also subject to an audit of their complete head office in Santiago, with oversight from the Group Financial financial information. We also requested that component auditors Controller based in London, and are ultimately reviewed and approved perform specified procedures over the corporate offices in Chile, and by the Directors alongside the Group financial statements. The Parent specific financial statement line items of other entities within the Group Company financial statements were audited by the Group engagement (including the transport division) to ensure that we had sufficient team. coverage from our audit work over each line of the Group’s financial Antofagasta plc Annual Report 2022176 #### 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 specific targets to reduce Scope 1 and 2 emissions by 30% by 2025 relative to the 2020 baseline, to use electricity solely from renewable sources at its mining operations by the end of 2022, which management has confirmed it has now achieved, 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** | $112 million (2021: $108 million). | $20 million (2021: $26.5 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 $112 million, which equates to 6.9% 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 more relevant than a performance-related measure as the company is an investment holding company for the Group. | Antofagasta plc Annual Report 2022 177 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 $96 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% (2021: 75%) of overall materiality, amounting to $84 million (2021: $81 million) for the Group financial statements and $15 million (2021: $19.875 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 $5.6 million (Group audit) (2021: $5.4 million) and $1 million (Parent Company audit) (2021: $1.3 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; - 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 paper to the Audit and Risk Committee in respect of going concern, and agreeing the forecasts set out in this paper 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 2022 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. 178 Antofagasta plc Annual Report 2022 Corporate governance statement We have nothing to report in respect of our responsibility to report when The Listing Rules require us to review the Directors’ statements in the Directors’ statement relating to the Parent Company’s compliance relation to going concern, longer-term viability and that part of the with the Code does not properly disclose a departure from a relevant corporate governance statement relating to the Parent Company’s provision of the Code specified under the Listing Rules for review by the compliance with the provisions of the UK Corporate Governance Code auditors. specified for our review. Our additional responsibilities with respect to Responsibilities for the financial statements and the audit the corporate governance statement as other information are described Responsibilities of the Directors for the financial statements in the Reporting on other information section of this report. As explained more fully in the Statement of Directors’ responsibilities in Based on the work undertaken as part of our audit, we have concluded respect of the financial statements, the Directors are responsible for the that each of the following elements of the corporate governance preparation of the financial statements in accordance with the applicable statement is materially consistent with the financial statements and our framework and for being satisfied that they give a true and fair view. knowledge obtained during the audit, and we have nothing material to The Directors are also responsible for such internal control as they add or draw attention to in relation to: determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. • The Directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks; In preparing the financial statements, the Directors are responsible for • The disclosures in the Annual Report that describe those principal assessing the Group’s and the Parent Company’s ability to continue as risks, what procedures are in place to identify emerging risks and an a going concern, disclosing, as applicable, matters related to going explanation of how these are being managed or mitigated; concern and using the going concern basis of accounting unless the • The Directors’ statement in the financial statements about whether Directors either intend to liquidate the Group or the Parent Company they considered it appropriate to adopt the going concern basis of or to cease operations, or have no realistic alternative but to do so. accounting in preparing them, and their identification of any material Auditors’ responsibilities for the audit of the financial statements uncertainties to the Group’s and Parent Company’s ability to continue Our objectives are to obtain reasonable assurance about whether the to do so over a period of at least twelve months from the date of financial statements as a whole are free from material misstatement, approval of the financial statements; whether due to fraud or error, and to issue an auditors’ report that • The Directors’ explanation as to their assessment of the Group’s and includes our opinion. Reasonable assurance is a high level of assurance, Parent Company’s prospects, the period this assessment covers and but is not a guarantee that an audit conducted in accordance with ISAs why the period is appropriate; and (UK) will always detect a material misstatement when it exists. • The Directors’ statement as to whether they have a reasonable Misstatements can arise from fraud or error and are considered expectation that the Parent Company will be able to continue in material if, individually or in the aggregate, they could reasonably be operation and meet its liabilities as they fall due over the period of its expected to influence the economic decisions of users taken on the basis assessment, including any related disclosures drawing attention to of these financial statements. any necessary qualifications or assumptions. Irregularities, including fraud, are instances of non-compliance with laws Our review of the Directors’ statement regarding the longer-term and regulations. We design procedures in line with our responsibilities, viability of the Group and Parent Company was substantially less in outlined above, to detect material misstatements in respect of scope than an audit and only consisted of making inquiries and irregularities, including fraud. The extent to which our procedures are considering the Directors’ process supporting their statement; checking capable of detecting irregularities, including fraud, is detailed below. 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. Antofagasta plc Annual Report 2022 179 Financial Statements / Independent auditors’ report to the members of Antofagasta plc continued Based on our understanding of the Group and industry, we identified that Use of this report the principal risks of non-compliance with laws and regulations related This report, including the opinions, has been prepared for and only for to breaches of environmental regulations, health and safety regulations, the Parent Company’s members as a body in accordance with Chapter 3 and unethical and prohibited business practices, and we considered the of Part 16 of the Companies Act 2006 and for no other purpose. We do extent to which non-compliance might have a material effect on the not, in giving these opinions, accept or assume responsibility for any financial statements. We also considered those laws and regulations that other purpose or to any other person to whom this report is shown or have a direct impact on the financial statements such as the Companies into whose hands it may come save where expressly agreed by our Act 2006 and tax law in the jurisdictions in which the Group operates. prior consent in writing. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of ### Other required reporting controls), and determined that the principal risks were related to the Companies Act 2006 exception reporting posting of inappropriate journal entries to increase revenue or reduce Under the Companies Act 2006 we are required to report to you if, in expenditure, and management bias in accounting estimates. The Group our opinion: engagement team shared this risk assessment with the component auditors so that they could include appropriate audit procedures in • we have not obtained all the information and explanations we require response to such risks in their work. Audit procedures performed by the for our audit; or Group engagement team and/or component auditors included: • adequate accounting records have not been kept by the Parent • Inquiries with management, including the Group’s Vice President of Company, or returns adequate for our audit have not been received Legal and the Head of Internal Audit, regarding their consideration of from branches not visited by us; or known or suspected instances of non-compliance with laws and • certain disclosures of Directors’ remuneration specified by law are regulation; not made; or • Obtaining legal letters from the Group’s external legal advisers in • the Parent Company financial statements and the part of the respect of litigation and claims and other such matters, where Directors’ and CEO’s remuneration report to be audited are not in considered necessary; agreement with the accounting records and returns. • Evaluation of the design of management’s controls intended to prevent We have no exceptions to report arising from this responsibility. and detect irregularities, in particular their anti-bribery controls; Appointment • Challenging assumptions and judgements made by management in Following the recommendation of the Audit and Risk Committee, we respect of critical accounting judgements and significant accounting were appointed by the members on 20May2015 to audit the financial estimates; and statements for the year ended 31December2015 and subsequent • Identifying and testing journal entries, in particular any journal entries financial periods. The period of total uninterrupted engagement is eight posted with certain unusual account combinations. years, covering the years ended 31December2015 to There are inherent limitations in the audit procedures described above. 31December2022. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and ### Other matter transactions reflected in the financial statements. Also, the risk of not In due course, as required by the Financial Conduct Authority Disclosure detecting a material misstatement due to fraud is higher than the risk of Guidance and Transparency Rule 4.1.14R, these financial statements will not detecting one resulting from error, as fraud may involve deliberate form part of the ESEF-prepared annual financial report filed on the concealment by, for example, forgery or intentional misrepresentations, National Storage Mechanism of the Financial Conduct Authority in or through collusion. accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). Our audit testing might include testing complete populations of certain This auditors’ report provides no assurance over whether the annual transactions and balances, possibly using data auditing techniques. financial report will be prepared using the single electronic format However, it typically involves selecting a limited number of items for specified in the ESEF RTS. 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 Simon Morley (Senior Statutory Auditor) draw a conclusion about the population from which the sample is for and on behalf of PricewaterhouseCoopers LLP selected. Chartered Accountants and Statutory Auditors A further description of our responsibilities for the audit of the financial London statements is located on the FRC’s website at: www.frc.org.uk/ 23March2023 auditorsresponsibilities. This description forms part of our auditors’ report. Antofagasta plc Annual Report 2022180 / Financial statements ## Consolidated income statement For the year ended 31 December 2022 | | Excluding | | | | | Excluding | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | exceptional | | Exceptional | | | exceptional | | Exceptional | | | | | | items | | Items | | | items | | Items | | | | | 2022 | | 2022 | 2022 | | 2021 | | 2021 | 2021 | | Note(s) | | $m | | $m | $m | | $m | | $m | $m | Group revenue 7 5,862.0 – 5,862.0 7,470. 1 – 7,470. 1 Total operating costs (4,227.7) – (4,227.7) (3,891.1) (1 77.6) (4,068.7) Operating profit from subsidiaries 8 1,634.3 – 1,634.3 3,579.0 (177.6) 3,401.4 Net share of results from associates and joint ventures 18 48.1 – 48.1 59.7 – 59.7 Gain on disposal of investment in joint venture – 944.7 944.7 – – – Operating profit from subsidiaries, and total profit 1,682.4 944.7 2,627.1 3,638.7 (177.6) 3,461.1 from associates and joint ventures 8 Investment income 40.2 – 40.2 5.0 – 5.0 Interest expense (78.6) – (78.6) (63.4) – (63.4) Other finance items (29.8) – (29.8) 74.4 – 74.4 Net finance (expense)/income 10 (68.2) – (68.2) 16.0 – 16.0 Profit before tax 1,614.2 944.7 2,558.9 3,654.7 (177.6) 3,477.1 Income tax expense 11 (603. 6) – (603.6) (1,332. 9) 90.6 (1,242.3) Profit from continuing operations 1,010.6 944.7 1,955.3 2,321.8 (87.0) 2,234.8 Profit for the year 1,010.6 944.7 1,955.3 2,321.8 (87.0) 2,234.8 Attributable to: Non-controlling interests 31 422.3 – 422.3 917.4 27.2 944.6 Owners of the parent 12 588.3 944.7 1,533.0 1,40 4.4 (11 4.2) 1,290.2 U S cents U S cents US cents US cents US c ents US c ents Basic earnings per share From continuing operations 12 59.7 95.8 155.5 142 .5 (11.6) 130.9 Antofagasta plc Annual Report 2022 181 antofagasta.co.uk 181 Financial Statements / Financial statements continued ## Consolidated statement of ## comprehensive income For the year ended 31 December 2022 2022 2021 Note(s) $m $m Profit for the year 1,955.3 2,234.8 Items that may be or were subsequently reclassified to profit or loss: Losses on cash flow hedges – (90.9) Losses in fair value of cash flow hedges transferred to the income statement – 126.8 Currency translation adjustment (0.4) (1.6) Tax relating to these items – (4.4) Total items that may be or were subsequently reclassified to profit or loss (0.4) 29.9 Items that will not be subsequently reclassified to profit or loss: Actuarial (losses)/gains on defined benefit plans 27 (18.1) 3.1 Gains/(losses) in fair value of equity investments 19 15.8 (2.1) Tax relating to these items 5.7 (2.5) Total items that will not be subsequently reclassified to profit or loss 3.4 (1.5) Total other comprehensive income 3.0 28.4 Total comprehensive income for the year 1,958.3 2,263. 2 Attributable to: Non-controlling interests 31 418.1 952.8 Owners of the parent 1,540.2 1,310.4 2022 2021 $m $m Total comprehensive income for the year - continuing operations 1,958.3 2,263.2 1,958.3 2,263.2 ## Consolidated Statement ## of Changes in Equity For the year ended 31 December 2022 Equity | | | | | | Retained | | attributable | | | Non- | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Share | Share | Other reserves | | | earnings | | to owners of | | controlling | | Total | | capital | premium | | (Note 30) | | (Note 30) | | the parent | | interests | | equity | | $m | $m | | | $m | | $m | | $m | | $m | $m | At 1 January 2021 89.8 199.2 (30.6) 7,492 .2 7,750.6 2,330.5 10,081.1 Profit for the year – – – 1,290.2 1,290.2 944.6 2,234.8 Other comprehensive income for the year – – 20.2 – 20.2 8.2 28.4 Total comprehensive income for the year – – 20.2 1,290.2 1,310.4 952.8 2,263.2 Dividends – – – (710.8) (710.8) (604.5) (1,315.3) At 31 December 2021 89.8 199.2 (10.4) 8,071.6 8,350.2 2,678.8 11,029.0 Profit for the year – – – 1,533.0 1,533.0 422.3 1,955.3 Other comprehensive income/(expense) for the year – – 15.4 (8.2) 7.2 (4.2) 3.0 Total comprehensive income for the year – – 15.4 1,524.8 1,540.2 418.1 1,958.3 Dividends – – – (1,262.9) (1,262.9) (80.0) (1,342.9) At 31 December 2022 89.8 199.2 5.0 8,333.5 8,627.5 3,016.9 11,644.4 Antofagasta plc Annual Report 2022182 182 Antofagasta Annual Report 2022 # Consolidated Balance sheet As at 31 December 2022 | | Note(s) | 2022 1m | 2021 1m | | --- | --- | --- | --- | | **Non-current assets** | | | | | Intangible assets | 14 | – | – | | Property, plant and equipment | 15 | 11,543.5 | 10,538.5 | | Other non-current assets | | 1.1 | 1.3 | | Inventories | 20 | 347.0 | 270.4 | | Investment in associates and joint ventures | 18 | 904.6 | 905.8 | | Trade and other receivables | 21 | 51.0 | 51.2 | | Equity investments | 19 | 90.5 | 8.7 | | Deferred tax assets | 28 | 78.5 | 96.8 | | | | **13,016.2** | **11,872.7** | | **Current assets** | | | | | Inventories | 20 | 708.1 | 532.8 | | Trade and other receivables | 21 | 2,087.2 | 1,146.1 | | Current tax assets | | 35.6 | 13.7 | | Liquid investments | 22 | 1,580.8 | 2,969.7 | | Cash and cash equivalents | 22 | 810.4 | 743.4 | | | | **5,222.1** | **5,405.7** | | **Total assets** | | **18,238.3** | **17,278.4** | | **Current liabilities** | | | | | Short-term borrowings and other financial liabilities | 23 | (432.5) | (337.1) | | Trade and other payables | 24 | (1,079.7) | (829.1) | | Short-term decommissioning and restoration provisions | 29 | (33.2) | (33.8) | | Current tax liabilities | | (60.4) | (374.2) | | | | **(1,605.8)** | **(1,574.2)** | | **Non-current liabilities** | | | | | Medium and long-term borrowings and other financial liabilities | 23 | (2,844.5) | (2,835.5) | | Trade and other payables | 24 | (8.0) | (16.8) | | Liabilities in relation to joint ventures | 18 | – | (0.6) | | Post-employment benefit obligations | 27 | (137.3) | (107.5) | | Decommissioning and restoration provisions | 29 | (455.0) | (302.3) | | Deferred tax liabilities | 28 | (1,543.3) | (1,412.5) | | | | **(4,988.1)** | **(4,675.2)** | | **Total liabilities** | | **(6,593.9)** | **(6,249.4)** | | **Net assets** | | **11,644.4** | **11,029.0** | | **Equity** | | | | | Share capital | 30 | 89.8 | 89.8 | | Share premium | 30 | 199.2 | 199.2 | | Other reserves | 30 | 5.0 | (10.4) | | Retained earnings | 30 | 8,333.5 | 8,071.6 | | **Equity attributable to owners of the parent** | | **8,627.5** | **8,350.2** | | Non-controlling interests | 31 | 3,016.9 | 2,678.8 | | **Total equity** | | **11,644.4** | **11,029.0** | The financial statements on pages 181 to 233 were approved by the Board of Directors on 23 March 2023 and signed on its behalf by Jean-Paul Luksic Tony Jensen Chairman Senior Independent Director Antofagasta plc Annual Report 2022 183 Financial Statements / Financial statements continued # Consolidated Cash Flow Statement For the year ended 31 December 2022 | | Note(s) | 2022 $m | 2021 $m | | --- | --- | --- | --- | | **Cash flow from continuing operations** | 32 | **2,738.3** | 4,507.7 | | Interest paid | | (74.3) | (60.7) | | Income tax paid | | (787.1) | (776.9) | | **Net cash from operating activities** | | **1,876.9** | 3,670.1 | | **Investing activities** | | | | | Capital contributions to associates and joint ventures | 18 | – | (33.5) | | Dividends from associates and joint ventures | 18 | 50.0 | 142.5 | | Acquisition of mining properties | | – | (4.5) | | Acquisition of equity investments | 19 | (66.5) | – | | Proceeds from sale of property, plant and equipment | | 0.2 | 1.5 | | Purchases of property, plant and equipment | | (1,879.2) | (1,773.0) | | Net decrease/(increase) in liquid investments | 22 | 1,388.9 | (543.7) | | Interest received | | 29.1 | 7.4 | | **Net cash used in investing activities** | | **(477.5)** | (2,203.3) | | **Financing activities** | | | | | Dividends paid to owners of the parent | 13 | (1,262.9) | (710.8) | | Dividends paid to preference shareholders of the Company | 13 | (0.1) | (0.1) | | Dividends paid to non-controlling interests | 31 | (80.0) | (604.5) | | Proceeds from issue of new borrowings | 32 | 865.9 | 149.1 | | Repayments of borrowings | 32 | (751.3) | (694.7) | | Principal elements of lease payments | 32 | (105.4) | (88.9) | | **Net cash used in financing activities** | | **(1,333.8)** | (1,949.9) | | **Net increase/(decrease) in cash and cash equivalents** | | **65.6** | (483.1) | | Cash and cash equivalents at beginning of the year | | 743.4 | 1,246.8 | | **Net increase/(decrease) in cash and cash equivalents** | 32 | **65.6** | (483.1) | | Effect of foreign exchange rate changes | 32 | 1.4 | (20.3) | | Cash and cash equivalents at end of the year | 22,32 | 810.4 | 743.4 | 184 Antofagasta plc Annual Report 2022 # Notes to the financial statements ## 1 Basis of preparation The consolidated financial statements of the Antofagasta plc Group have been prepared in accordance with UK adopted international accounting standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. The financial statements have been prepared on the going concern basis. ### Going concern The Directors have assessed the going concern status of the Group, considering the period to 31 December 2024. The Group's business activities, together with those factors likely to affect its future performance, are set out in the Strategic Report, and in particular within the Operating Review. Details of the cash flows of the Group during the period, along with its financial position at the period-end, are set out in the Financial Review. The consolidated financial statements include details of the Group's cash, cash equivalents and liquid investment balances in Note 22, and details of borrowings are set out in Note 23. When assessing the going concern status of the Group, 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 2022, with combined cash, cash equivalents and liquid investments of $2,391.2 million. Total borrowings were $3,277.0 million, resulting in a net debt position of $885.8 million. Of the total borrowings, only 13% is repayable within one year, and 17% repayable between one and two years. 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. This analysis has focused on the existing asset base of the Group, without factoring in potential development projects, which is considered appropriate for an assessment of the Group's ability to manage the impact of a depressed economic environment. The analysis has only included the draw-down of existing committed borrowing facilities, and has not assumed that any new borrowing facilities will be put in place. The Directors have assessed the key risks which could impact the prospects of the Group over the going concern 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, assessing the standalone impact of each of: - A significant deterioration in the future copper price forecasts by 20% throughout the going concern 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 deterioration of 20% in the copper price throughout the review period. - The potential impact of the Group's most significant individual operational risks. - A shut-down of any one of the Group's operations for a period of three months. - Potential changes to the Chilean mining royalty, taking into account the Group's existing tax stability agreements. 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 have formed a judgement, at the time of approving the financial statements, that there are no material uncertainties that the Directors are aware of that cast doubt on the Group's going concern status and that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the period to 31 December 2024. The Directors therefore consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements. ### Company structure Antofagasta plc is a company limited by shares, incorporated and domiciled in the United Kingdom at 103 Mount Street, London W1K 2TJ. The immediate parent of the Group is Metalinvest Establishment, which is controlled by the E. Abaroa Foundation, in which members of the Luksic family are interested. The nature of the Group's operations is mining and exploration activities and the transport of rail and road cargo. ### A) Adoption of new accounting standards The following accounting standards, amendments and interpretations became effective in the current reporting period: - Property, Plant and Equipment – Proceeds before Intended Use (Amendments to IAS 16) - Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37) - Annual Improvements to IFRS Standards 2018–2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41) - Reference to the Conceptual Framework (Amendments to IFRS 3) The application of these standards and interpretations effective for the first time in the current year has had no significant impact on the amounts reported in these financial statements. The amendment to IAS 16 Property, Plant and Equipment – Proceeds before intended use may have significant impacts for the Group in future periods. Previously, the Group has deducted amounts received from the sale of products during the initial ramp-up of new projects, before commercial production is achieved, from the capital cost of the project. Under the amendment to IAS 16, such amounts will now instead be recognised as revenue in the income statement along with a corresponding allocation of related operating expenses, which is likely to result in increased revenue and operating expenses and a higher initial capitalised amount. There were no relevant projects impacted by the amendment during 2022. The amendment would apply retrospectively only to relevant projects in progress at 1 January 2021 which were generating proceeds, and there were no such projects at 1 January 2021. Antofagasta plc Annual Report 2022 185 Financial Statements / Notes to the financial statements continued ### 1 Basis of preparation continued B) Accounting standards issued but not yet effective At the date of authorisation of these financial statements, the following standards and interpretations, which have not been applied in these financial statements, were in issue but not yet effective. It is expected that where applicable, these standards and amendments will be adopted on each respective effective date (after 1 January, 2023). None of these standards are expected to have a significant impact on the Group. • IFRS 17, Insurance Contracts • Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) • Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2 • Definition of Accounting Estimates – Amendments to IAS 8 The following standards are effective after 1 January, 2024 (and subject to UK endorsement): • Classification of Liabilities as Current or Non-Current (Amendments to IAS 1) • Lease Liability in a Sale and Leaseback (Amendments to IFRS16) • Non-current Liabilities with Covenants (Amendments to IAS 1) Antofagasta plc Annual Report 2022186 2 Principal accounting policies A) Accounting convention These financial statements have been prepared under the historical cost convention as modified by the use of fair values to measure certain financial instruments, principally provisionally priced sales as explained in Note 2(F) and financial derivative contracts as explained in Note 2(W). B) Basis of consolidation The financial statements comprise the consolidated financial statements of Antofagasta plc (“the Company” or “the Parent” or “the Parent Company”) and its subsidiaries (collectively “the Group”). Subsidiaries – A subsidiary is an entity over which the Group has control, which is the case when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The consolidated financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiaries after eliminating intercompany balances and transactions. For partly-owned subsidiaries, the net assets and profit attributable to non-controlling shareholders are presented as “Non-controlling interests” in the consolidated balance sheet and consolidated income statement. Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Other types of non- controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance. Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company. When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non- controlling interests. When assets of the subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss has been recognised in other comprehensive income and accumulated in equity, the amounts previously recognised in other comprehensive income and accumulated in equity are accounted for as if the Group had directly disposed of the relevant assets (ie reclassified to profit or loss or transferred directly to retained earnings as specified by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture. Acquisitions and disposals are treated as explained in Note 2(G) relating to business combinations and goodwill. C) Investments in associates An associate is an entity over which the Group is in a position to exercise significant influence, but not control or joint control, through the power to participate in the financial and operating policy decisions of that entity. The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting. This requires recording the investment initially at cost to the Group and then, in subsequent periods, adjusting the carrying amount of the investment to reflect the Group’s share of the associate’s results less any impairment and any other changes to the associate’s net assets such as dividends. When the Group loses control of a former subsidiary but retains an investment in associate in that entity, the initial carrying value of the investment in associate is recorded at its fair value at that point. When the Group’s share of losses of an associate exceeds the Group’s interest in that associate, the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. D) Joint arrangements A joint arrangement is an arrangement of which two or more parties have joint control. Joint arrangements are accounted for depending on the nature of the arrangement. i) Joint ventures – are accounted for using the equity method in accordance with IAS 28 Investment in Associates and Joint Ventures as described in Note 18. ii) Joint operations – are accounted for recognising directly the assets, obligations, revenues and expenses of the joint operator in the joint arrangement. The assets, liabilities, revenues and expenses are accounted for in accordance with the relevant IFRS. When a Group entity transacts with its joint arrangements, profits and losses resulting from the transactions with the joint arrangements are recognised in the Group’s consolidated financial statements only to the extent of interests in the joint arrangements that are not related to the Group. 186 Antofagasta Annual Report 2022 E) Currency translation Copper and molybdenum concentrate sale agreements and copper The functional currency for each entity in the Group is determined as the cathode sale agreements generally provide for provisional pricing of currency of the primary economic environment in which it operates. sales at the time of shipment, with final pricing based on the monthly Transactions in currencies other than the functional currency of the average London Metal Exchange (“LME”) copper price or the monthly entity are translated at the exchange rate ruling at the date of the average market molybdenum price for specified future periods. This transaction. Monetary assets and liabilities denominated in currencies normally ranges from one to four months after delivery to the customer. other than the functional currency are retranslated at year end exchange For sales contracts which contain provisional pricing mechanisms, the rates. Gains and losses on retranslation are included in net profit or loss initial invoice typically reflects the month-average market price for the for the period within other finance items. metal in the month of shipment, with the associated receivable balance subsequently measured at fair value through profit or loss. Gains and The presentational currency of the Group and the functional currency of losses from the marking-to market of the receivable balance in relation t o the Company is the US dollar. On consolidation, income statement items open sales are recognised through adjustments to other income for entities with a functional currency other than the US dollar are presented within revenue in the income statement and to trade translated into US dollars at average rates of exchange. Balance sheet receivables in the balance sheet. The fair value calculations are based on items are translated at period-end exchange rates. Exchange differences forward prices at the period end for copper concentrate and cathode on translation of the net assets of such entities are taken to equity and sales, and period-end average prices for molybdenum concentrate sales recorded in a separate currency translation reserve. Cumulative due to the absence of a futures market for this product. translation differences arising after the transition date to IFRS are recognised as income or as expenses in the income statement in the For the Transport division, revenue in respect of its transportation and period in which an operation is disposed of. ancillary services are recognised over time in line with the performance of those services. On consolidation, exchange gains and losses which arise on balances between Group entities are taken to reserves where that balance is, in Interest income substance, part of the net investment in a foreign operation, ie where Interest income is accrued on a time basis, by reference to the principal settlement is neither planned nor likely to occur in the foreseeable future. outstanding and the effective interest rate applicable, which is the rate All other exchange gains and losses on Group balances are recognised in that exactly discounts estimated future cash receipts through the the income statement within other finance items. expected life of the financial asset to that asset’s net carrying amount. Fair value adjustments and any goodwill arising on the acquisition of a Interest received is recognised within investing activities in the foreign entity are treated as assets of the foreign entity and translated consolidated cash flow statement. at the period-end rate. Dividend income Dividend income from equity investments, associates and joint ventures F) Revenue recognition and other income is recognised when the shareholders’ right to receive payment has been Revenue represents the value of goods and services supplied to third established. For associates and joint ventures, it is recorded as a parties during the year. Revenue is measured at the fair value of decrease of the investment. consideration received or receivable, and excludes any applicable sales tax. Revenue is recognised when the Group satisfies a performance obligation by transferring a promised good or service to a customer. An asset is transferred when (or as) the customer obtains control of that asset. For the Group’s mining products, the customer generally gains control over the material when it has been loaded at the port of loading, and so this is the point of revenue recognition. The Group sells a significant proportion of its products on Cost, Insurance & Freight (CIF) Incoterms, which means that the Group is responsible for shipping the product to a destination port specified by the customer. In these cases the customer still gains control over the material when it has been loaded at the port of loading, and so that remains the point of revenue recognition for the sale of material; however, the shipping service represents a separate performance obligation, and revenue in relation to such services is recognised separately from the sale of the material over time as the shipping service is provided, along with the associated costs. Shipment revenue is recognised at the contracted price to the Group as this reflects the standalone selling price. Revenue from mining activities is recorded at the invoiced amounts with an adjustment for provisional pricing at each reporting date, as explained below. For copper and molybdenum concentrates, 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 charge” deduction, to reflect the lower value of this partially processed material compared with the fully refined metal. Revenue includes amounts from the sale of by-products such as gold and silver. Antofagasta plc Annual Report 2022 187 G) Business combinations and goodwill Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition- date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. The results of businesses acquired during the year are brought into the consolidated financial statements from the effective date of acquisition. The identifiable assets, liabilities and contingent liabilities of a business, which can be measured reliably, are recorded at their provisional fair values at the date of acquisition. Provisional fair values are finalised within 12 months of the acquisition date. Acquisition-related costs are expensed as incurred. When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the “measurement period” (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. antofagasta.co.uk 187 Financial Statements / Notes to the financial statements continued Costs incurred in acquiring exploration and mining licences are classified as intangible assets when construction of the related mining operation has not yet commenced. When construction commences the licences are transferred from intangible assets to the mining properties category within property, plant and equipment. I ) Stripping costs Pre-stripping and operating stripping costs are incurred in the course of the development and operation of open-pit mining operations. Pre-stripping costs relate to the removal of waste material as part of the initial development of an open-pit, in order to allow access to the ore body. The capitalised costs are depreciated once production commences on a unit of production basis, in proportion to the volume of ore extracted in the year compared with total proven and probable reserves for that pit at the beginning of the year. Operating stripping costs relate to the costs of extracting waste material as part of the ongoing mining process. The ongoing mining and development of the Group’s open-pit mines is generally performed via a succession of individual phases. The costs of extracting material from an open-pit mine are generally allocated between ore and waste stripping in proportion to the tonnes of material extracted. The waste stripping costs are generally absorbed into inventory and expensed as that inventory is processed and sold. Where the stripping costs relate to a significant stripping campaign which is expected to provide improved access to an identifiable component of the ore body (typically an individual phase within the overall mine plan), the costs of removing waste in order to improve access to that part of the ore body will be capitalised within property, plant and equipment. The capitalised costs will then be amortised on a unit of production basis, in proportion to the volume of ore extracted compared with the total ore contained in the component of the pit to which the stripping campaign relates. J) Intangible assets Exploration and mining licences are classified as intangible assets when construction of the related mining operation has not yet commenced. When construction commences, the licences are transferred from intangible assets to the mining properties category within property, plant and equipment. K) Property, plant and equipment The costs of mining properties and leases, which include the costs of acquiring and developing mining properties and mineral rights, are capitalised as property, plant and equipment in the year in which they are incurred, when a mining project is considered to be commercially viable (normally when the project has completed a pre-feasibility study, and the start of a feasibility study has been approved). The cost of property, plant and equipment comprises the purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended. Once a project has been established as commercially viable, related development expenditure is capitalised. This includes costs incurred in preparing the site for mining operations, including pre-stripping costs. Capitalisation ceases when the mine is capable of commercial production, with the exception of development costs which give rise to a future benefit. Interest on borrowings related to the construction or development of projects is capitalised as part of the cost of the asset. To the extent that borrowings have been put in place specifically to fund the construction of the asset, the capitalised amount will reflect the actual interest costs H) Exploration and evaluation expenditure incurred on that borrowing. If the construction is funded out of general Exploration and evaluation costs, other than those incurred in acquiring borrowings, the capitalised interest expense will be calculated based on exploration licences, are expensed in the year in which they are incurred. the entity’s weighted average interest rate, applied to the expenditure on When a mining project is considered to be commercially viable (normally the asset (with the capitalised interest amount not exceeding the entity’s when the project has completed a pre-feasibility study, and the start of a total borrowing cost for the period). The interest costs are capitalised, feasibility study has been approved) all further directly attributable pre- until such time as the assets are substantially ready for their intended production expenditure is capitalised. Capitalisation of pre-production use or sale which, in the case of mining properties, is when they are expenditure ceases when commercial levels of production are achieved. capable of commercial production. Antofagasta plc Annual Report 2022188 2 Principal accounting policies continued The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as “measurement period” adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IFRS 9. When a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (ie the date when the Group obtains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances which existed at the acquisition date that, if known, would have affected the amounts recognised at that date. Goodwill arising in a business combination is measured as the excess of the sum of the consideration transferred, the amount of any non- controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net identifiable assets acquired and liabilities assumed. Any goodwill on the acquisition of subsidiaries is separately disclosed, while any goodwill on the acquisition of associates and joint ventures is included within investments in equity accounted entities. Internally generated goodwill is not recognised. Where the fair values of the identifiable net assets acquired exceed the sum of the consideration transferred, the surplus is credited to the profit or loss in the period of acquisition as a bargain purchase gain. The Group sometimes enters into earn-in arrangements whereby the Group acquires an interest in a project company in exchange for funding exploration and evaluation expenditure up to a specified level of expenditure or a specified stage in the life of the project. Funding is usually conditional on the achievement of key milestones by the partner. Typically there is no consideration transferred or funding liability on the effective date of acquisition of the interest in the project company and no goodwill is recognised on this type of transaction. The results of businesses sold during the year are included in the consolidated financial statements for the period up to the effective date of disposal. Gains or losses on disposal are calculated as the difference between the sales´ proceeds (net of expenses) and the net assets attributable to the interest which has been sold. Where a disposal represents a separate major line of business or geographical area of operations, the net results attributable to the disposed entity are shown separately in the income statement as a discontinued operation. 188 Antofagasta Annual Report 2022 L) Depreciation of property, plant and equipment mining operations typically requires further capital expenditure and Depreciation of an asset begins when it is available for use, ie when it is ongoing mine development, and accordingly the Group typically applies in the location and condition necessary for it to be capable of operating in this valuation estimate in its impairment assessments, unless indicated the manner intended. otherwise. Details of the valuations and sensitivities of the Group’s minin g operations considered as part of the impairment trigger assessment are Property, plant and equipment is depreciated over its useful life, or over included in Note 5. the remaining life of the operation if shorter, to residual value. The major categories of property, plant and equipment are depreciated as follows: If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount is (i) Land – freehold land is not depreciated unless the value of the land reduced to the recoverable amount. An impairment charge is recognised is considered to relate directly to a particular mining operation, in in the income statement immediately. Where an impairment subsequently which case the land is depreciated on a straight-line basis over the reverses, the carrying amount is increased to the revised estimate of expected mine life. recoverable amount, but so that the increased carrying amount does not (ii) Mining properties – mining properties, including capitalised exceed the carrying value that would have been determined if no financing costs, are depreciated on a unit of production basis, in impairment had previously been recognised after taking into account the proportion to the volume of ore extracted in the year compared with depreciation and/or amortisation that would otherwise have been total proven and probable reserves at the beginning of the year. recorded in the intervening period. A reversal is recognised in the income statement immediately. (iii) Buildings and infrastructure – straight-line basis over 10 to 25 years. N) Inventory (iv) Railway track (including trackside equipment) – straight-line basis Inventory consists of raw materials and consumables, work-in-progress over 20 to 25 years. and finished goods. Work-in-progress represents material that is in the process of being converted into finished goods. The conversion process (v) Wagons and rolling stock – straight-line basis over 10 to 20 years. for mining operations depends on the nature of the copper ore. For (vi) Machinery, equipment and other assets – are depreciated on a sulphide ores, processing typically includes milling and concentrating, unit of production basis, in proportion to the volume of ore/material resulting in the production of copper concentrate. For oxide ores, processed or hours of equipment usage, or on a straight-line basis processing includes leaching of stockpiles, solvent extraction and over 5 to 20 years. electrowinning and results in the production of copper cathodes. Finished goods consist of copper concentrate containing gold and silver at Los (vii) Assets under construction – no depreciation until asset is Pelambres and Centinela and copper cathodes at Centinela and available for use. Antucoya. Los Pelambres and Centinela also produce molybdenum as a (viii) Lease right-of-use assets – depreciated over the shorter of the by-product. asset’s useful life and the lease term on a straight-line basis. Inventory is valued at the lower of cost, on a weighted average basis, and (ix) Stripping cost – capitalised costs are amortised on a unit of net realisable value. Net realisable value represents estimated selling production basis, in proportion to the volume of ore extracted price less all estimated costs of completion and costs to be incurred in compared with the total ore contained in the component of the pit to marketing, selling and distribution. Cost of finished goods and work-in- which the stripping campaign relates (Note 15). progress is production cost and for raw materials and consumables it is purchase price. Production cost includes: Residual values and useful lives are reviewed, and adjusted if appropriate, at least annually, and changes to residual values and useful • labour costs, raw material costs and other costs directly attributable to lives are accounted for prospectively. the extraction and processing of ore, • depreciation of plant, equipment and mining properties directly M) Impairment of property, plant and equipment and involved in the production process, and intangible assets • an appropriate allocation of production overheads. Property, plant and equipment and intangible assets relating to exploration and mining licences are reviewed for impairment if there is Stockpiles represent ore that is extracted and is available for further any indication that the carrying amount may not be recoverable. In processing. Costs directly attributable to the extraction of ore are respect of historical impairments recognised in prior years, the Group generally allocated as part of production costs in proportion to the tonnes assesses whether there is any indication that impairment may no longer of material extracted. Operating stripping costs are generally absorbed exist or may have decreased. into inventory, and therefore expensed as that inventory is processed and sold. If ore is not expected to be processed within 12 months of the If any such indications exist, the recoverable amount of the asset is balance sheet date it is included within non-current assets. If there is estimated in order to determine the extent of the impairment or reversal significant uncertainty as to when any stockpiled ore will be processed it (if any). Where the asset does not generate cash flows that are largely is expensed as incurred. independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs of disposal and value in use. Fair value less costs of disposal reflects the net amount the Group would receive from the sale of the asset in an orderly transaction between market participants. For mining assets, this would generally be determined based on the present value of the estimated future cash flows arising from the continued use, further development or eventual disposal of the asset. The estimates used in determining the present value of those cash flows are those that an independent market participant would consider appropriate. Value in use reflects the expected present value of the future cash flows which the Group would generate through the operation of the asset in its current condition, without taking into account potential enhancements or further development of the asset. The fair value less costs of disposal valuation will normally be higher than the value in use valuation, as realisation of the full potential of the Group’s Antofagasta plc Annual Report 2022 189 antofagasta.co.uk 189 Financial Statements / Notes to the financial statements continued ### 2 Principal accounting policies continued O) Taxation Tax expense comprises the charges or credits for the year relating to both current and deferred tax. Current tax is based on taxable profit for the year. Taxable profit may differ from net profit as reported in the income statement because it excludes items of income or expense that are taxable and deductible in different years and also excludes items that are not taxable or deductible. The liability for current tax is calculated using tax rates for each entity in the consolidated financial statements which have been enacted or substantively enacted at the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on temporary differences (ie differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit). Deferred tax is accounted for using the balance sheet liability method and is provided on all temporary differences with certain limited exceptions as follows: (i) tax payable on undistributed earnings of subsidiaries, associates and joint ventures is provided except where the Group is able to control the remittance of profits and it is probable that there will be no remittance of past profits earned in the foreseeable future, (ii) deferred tax is not provided on the initial recognition of an asset or liability in a transaction that does not affect accounting profit or R) Share-based payments taxable profit and is not a business combination; nor is deferred tax For cash-settled share-based payments, a liability is recognised for the provided on subsequent changes in the carrying value of such goods or services acquired, measured initially at the fair value of the assets and liabilities, for example where they are depreciated, and liability. At the end of each reporting period until the liability is settled, an d at the date of settlement, the fair value of the liability is remeasured, with (iii) the initial recognition of any goodwill. any changes in fair value recognised in profit or loss for the year. The Deferred tax assets are recognised only to the extent that it is probable Group currently does not have any equity settled share-based payments that they will be recovered through sufficient future taxable profit. to employees or third parties. The carrying amount of deferred tax assets is reviewed at each balance S) Post-employment benefits sheet date. The Group operates defined contribution schemes for a limited number Deferred tax is calculated at the tax rates that are expected to apply in of employees. For such schemes, the amount charged to the income the period when the liability is settled or the asset is realised. Deferred statement is the contributions paid or payable in the year. tax is charged or credited in the income statement, except when it relates Employment terms may also provide for payment of a severance to items charged or credited directly to equity, in which case the deferred indemnity when an employment contract comes to an end. This is tax is also taken directly to equity. typically at the rate of one month for each year of service (subject in P) Provisions most cases to a cap as to the number of qualifying years of service) and Provisions are recognised when the Group has a present obligation (legal based on final salary level. The severance indemnity obligation is treated or constructive) as a result of a past event, it is probable that the Group as an unfunded defined benefit plan, and the calculation is based on will be required to settle the obligation and a reliable estimate can be valuations performed by an independent actuary using the projected unit made of the amount of the obligation. credit method, which are regularly updated. The amount recognised as a provision is the best estimate of the The obligation recognised in the balance sheet represents the present consideration required to settle the present obligation at the end of the value of the severance indemnity obligation. Actuarial gains and losses reporting period, taking into account the risks and uncertainties are immediately recognised in other comprehensive income. surrounding the obligation. When a provision is measured using the cash T) Cash and cash equivalents flows estimated to settle the present obligation, its carrying amount is the Cash and cash equivalents comprise cash on hand, deposits held on call present value of those cash flows (when the effect of the time value of with banks, highly liquid investments that are readily convertible into money is material). known amounts of cash, are subject to insignificant risk of changes in When some or all of the economic benefits required to settle a provision value and are held for the purpose of meeting short-term cash are expected to be recovered from a third party, a receivable is commitments rather than for investment or other purposes. The cash recognised as an asset if it is virtually certain that reimbursement will be balance is presented net of bank overdrafts which are repayable on received and the amount of the receivable can be measured reliably . demand. Cash and cash equivalents have a maturity period of 90 days or less. Antofagasta plc Annual Report 2022190 Q) Provisions for decommissioning and restoration costs Obligations to incur decommissioning and restoration costs can arise as a result of the development or ongoing operation of a mining property. Costs are estimated on the basis of a formal closure plan and are subjec t to regular formal review. Decommissioning obligations arising from the construction of property, plant and equipment (including installation of plant and site preparation work) are provided for at their net present value as the construction of the asset gives rise to the obligation, and included within the property, plant and equipment cost. These decommissioning costs are charged against profit or loss over the life of the mine, through depreciation of th e property, plant and equipment balance (recorded within operating expenses). The unwinding of the discount on the provision is recorded within other finance items. Changes in the measurement of a decommissioning provision are added to, or deducted from, the property, plant and equipment balance in the current year. Restoration obligations, arising from ongoing operating activities, are provided for at their net present values and charged against operating expenses as the obligation arises. Changes in the measurement of a restoration provision which, relate to a change in the estimate of the closure costs or a change in the discount rate, are charged against operating expenses, and changes relating to foreign exchange are recorded within other finance items. 190 Antofagasta Annual Report 2022 U) Liquid investments 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 (iv) Borrowings (loans and preference shares) – Interest-bearing cash equivalents, normally because even if readily accessible, the loans and bank overdrafts are initially recorded at fair value which i s underlying investments have an average maturity profile greater than 90 typically equal to the proceeds received, net of direct issue costs. days from the date first entered into, or because they are held primarily They are subsequently measured at amortised cost using the for investment purposes rather than meeting short-term cash effective interest method, with interest expense recognised on an commitments. These assets are designated as fair value through profit or effective yield basis. The effective interest method is a method of loss, with the fair value movements recorded within investment income. calculating the amortised cost of a financial liability and of allocating V) Leases interest expense over the relevant period. The effective interest rate Leases are recognised as a right-of-use asset and a corresponding is the rate that exactly discounts estimated future cash payments liability at the date at which the leased asset is available for use by the through the expected life of the financial liability, or, where Group. Each lease payment is allocated between the liability and finance appropriate, a shorter period. Finance charges, including premiums cost. The finance cost is charged to profit or loss over the lease period payable on settlement or redemption and direct issue costs, are so as to produce a constant periodic rate of interest on the remaining accounted for on an accruals basis using the effective interest rate balance of the liability for each period. The right-of-use asset is method. Amounts are either recorded as financing costs in profit or depreciated over the shorter of the asset's useful life and the lease term loss or capitalised in accordance with the accounting policy set out on a straight-line basis. in Note 2(K). Finance charges are added to the carrying amount of the instrument to the extent that they are not settled in the period in Assets and liabilities arising from a lease are initially measured on a which they arise. present value basis. Lease liabilities include the net present value of the following lease payments: Interest paid is recognised within operating activities in the consolidated cash flow statement. • fixed payments (including in-substance fixed payments), less any lease incentives receivable The Sterling-denominated preference shares issued by the • variable lease payments that are based on an index or a rate Company carry a fixed rate of return without the right to participate • amounts expected to be payable by the lessee under residual value in any surplus. They are accordingly classified within borrowings guarantees and translated into US dollars at period-end rates of exchange. • the exercise price of a purchase option if the lessee is reasonably Preference share dividends are included within other finance items certain to exercise that option, and within net finance expense in the income statement. • payments of penalties for terminating the lease, if the lease term (v) Equity instruments – Equity instruments issued are recorded at reflects the lessee exercising that option. the proceeds received, net of direct issue costs. Equity instruments The lease payments are discounted using the interest rate implicit in the of the Company comprise its Sterling-denominated issued ordinary lease. If that rate cannot be readily determined, the lessee’s incremental share capital and related share premium. As explained in Note 2(E), borrowing rate is used, being the rate that the lessee would have to pay the presentational currency of the Group and the functional to borrow the funds necessary to obtain an asset of similar value in a currency of the Company is US dollars, and ordinary share capital similar economic environment with similar terms and conditions. and share premium are translated into US dollars at historical rates of exchange based on dates of issue. Right-of-use assets are measured at cost comprising the following: (vi) Derivative financial instruments – As explained in Note 25(D), th e • the amount of the initial measurement of the lease liability Group periodically uses derivative financial instruments to reduce • any lease payments made at or before the commencement date less exposure to foreign exchange, interest rate and commodity price any lease incentives received movements. The Group does not use such derivative instruments • any initial direct costs, and for trading purposes. The Group has applied the hedge accounting • restoration costs. provisions of IFRS 9 Financial Instruments. The effective portion of W) Other financial instruments changes in the fair value of derivative financial instruments that are Financial assets and financial liabilities are recognised on the Group’s designated and qualify as hedges of future cash flows have been balance sheet when the Group becomes a party to the contractual recognised directly in equity, with such amounts subsequently provisions of the instrument. Financial assets are derecognised when the recognised in profit or loss in the period when the hedged item contractual rights to the cash flows from the financial asset expire or the affects profit or loss. Any ineffective portion is recognised Group has transferred the asset to another party. Financial liabilities are immediately in profit or loss. Realised gains and losses on removed from the Group’s balance sheet when they are extinguished – commodity derivatives recognised in profit or loss are recorded ie when the obligation specified in the contract has been discharged, within revenue. The time value element of changes in the fair value cancelled or expired. of derivative options is recognised within other comprehensive income. (i) Investments – Equity investments which are not subsidiaries, associates or joint ventures are recognised at fair value. The Group Financial assets with embedded derivatives are considered in their generally applies an irrevocable election for each equity investment entirety when determining the appropriate classification and to designate them as Fair Value through Other Comprehensive measurement. The treatment of embedded derivatives arising from Income (FVOCI). Dividends from equity investments are recognised provisionally priced commodity sales contracts is set out in further in the income statement when the right to receive payment is detail in Note 2(F) relating to revenue. Derivatives embedded in established. financial liabilities are treated as separate derivatives when their risks and characteristics are not closely related to those of the host (ii) Trade and other receivables – As explained above, for sales contract and the host contract is not measured at fair value. contracts which contain provisional pricing mechanisms the total Changes in fair value are reported in profit or loss for the year. receivable balance is measured at fair value through profit or loss. Other receivable balances are recognised at amortised cost. Antofagasta plc Annual Report 2022 191 (iii) Trade and other payables – Trade and other payables are generally not interest-bearing and are normally stated at their nominal value. antofagasta.co.uk 191 Financial Statements / Notes to the financial statements continued When an impairment test is performed, management necessarily applies its judgement in allocating assets to CGUs, in estimating the probability, timing and value of underlying cash flows and in selecting appropriate discount rates to be applied within the fair value less costs of disposal calculation. The key assumptions are se t out in Note 2(M). Subsequent changes to CGU allocation, licensing status, reserves and resources, price assumptions or other estimates and assumptions in the fair value less costs of disposal calculation could impact the carrying value of the respective assets. As explained in Note 5, based on an assessment of both qualitative and quantitative factors, there were no indicators of potential impairment, or reversal of previous impairments, for the Group’s non-current assets associated with its mining operations at the 2022 year-end, and accordingly no impairment tests have been performed. However, whether or not an impairment indicator exists is a critical judgement, in particular as at 31 December 2022 for Zaldívar (given the ongoing permitting process and the other factors set out in note 5) and at Antucoya (given the impairments recognised in 2012 and 2016 and, therefore, the sensitivity of the asset’s value to movements in macroeconomic assumptions and other developments) (ii) Capitalisation of project costs within property, plant and equipment As explained in Note 2(K) the costs of developing mining properties are capitalised as property, plant and equipment when the mining ### 3 Critical accounting judgements and key project is considered to be commercially viable. Commercial viability ### sources of estimation uncertainty is normally considered to be demonstrable when the project has completed a pre-feasibility study, and the start of a feasibility study Determining many of the amounts included in the financial statements has been approved. Management reviews amounts capitalised to involves the use of judgement and/or estimation. These judgements and ensure that the treatment of that expenditure as capital rather than estimates are based on management’s best knowledge of the relevant operating expenditure is reasonable, in particular in respect of the facts and circumstances having regard to prior experience, but actual commercial viability of the project. results may differ from the amounts included in the financial statements. Information about such judgements and estimates is included in the As at 31 December 2022, $231 million (2021 – $180 million) of principal accounting policies in Note 2 or the other notes to the financial feasibility study costs relating to the Centinela Second Concentrator statements, and the key areas are set out below. project, which is still under evaluation and has not yet received final Board approval, were capitalised within property, plant and A) Judgements equipment. Should the Group ultimately take the decision not to The following are the critical judgements, apart from those involving proceed with the development of this project, then it is likely that the estimations (which are dealt with separately), that have been made in the corresponding element of the capitalised feasibility study costs process of applying the Group’s accounting policies and that have the would need to be impaired. most significant effect on the amounts recognised in the financial statements. B) Estimates (i) Non-financial assets impairment The Group makes estimates and assumptions concerning the As explained in Note 2(M), the Group reviews the carrying value of future. The resulting accounting estimates will, by definition, seldom its intangible assets and property, plant and equipment to determine equal the related actual results. The estimates and assumptions that whether there is any indication that those assets are impaired. In have a significant risk of causing a material adjustment to the performing assessments for impairment triggers, assets that do not carrying amounts of assets and liabilities within the next financial generate largely independent cash inflows are allocated to an year are addressed below. appropriate cash generating unit (“CGU”). Details of the valuations and sensitivities of the Group’s mining operations considered as part of the impairment trigger assessment are included in Note 5, including quantitative sensitivity analyses. Details of the value of assets and liabilities for each of the mining operations are set out in Note 6. When an impairment trigger is identified, an impairment test is performed, wherein the recoverable amount of those assets, or the CGU, is measured at the higher of their fair value less costs of disposal and value in use. Antofagasta plc Annual Report 2022192 2 Principal accounting policies continued (vii) Impairment of financial assets – The Group applies the forward- looking expected credit loss model to its financial assets, other than those measured at fair value through profit or loss. The Group applies the IFRS 9 “simplified approach” to its trade receivables, measuring the loss allowance at the lifetime expected credit loss. For other financial assets, where the credit risk has not increased significantly since initial recognition, the loss allowance is measured at the 12 month expected credit loss. If there has been a significant increase in credit risk, the loss allowance is measured at the lifetime expected credit loss. Increases or decreases to the credit loss allowance are recognised immediately in profit or loss. X) 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 tax effect of items presented as exceptional is also classified as exceptional, as are material deferred tax adjustments that relate to more than one reporting period. Y) Rounding All amounts disclosed in the financial statements and notes have been rounded to the nearest million dollars unless otherwise stated. These policies have been consistently applied to all the years presented, unless otherwise stated. 192 Antofagasta Annual Report 2022 # **(i) Deferred tax liabilities in respect of undistributed earnings of subsidiaries** No deferred tax liability is recognised in respect of the undistributed earnings of subsidiaries where it is not likely that those profits will be distributed in the foreseeable future. When determining whether it is likely that distributions will be made in the foreseeable future, and what is the appropriate foreseeable future period for this purpose, the Group considers factors such as the predictability of the likely future Group dividends, taking into account the Group's dividend policy and the level of potential volatility of the Group's future earnings, as well as the current level of distributable reserves at the Antofagasta plc entity level. As set out in Note 28, at 31 December 2022 deferred withholding tax liabilities of $71.6 million have been recognised, which relate to undistributed earnings of subsidiaries where it is considered likely that the corresponding profits will be distributed in the foreseeable future. The value of the remaining undistributed earnings of subsidiaries, for which deferred tax liabilities have not been recognised, because the Group is in a position to control the timing of the distributions and it is likely that distributions will not be made in the foreseeable future, was $6,430.4 million (31 December 2021 – $6,483.3 million). If deferred withholding tax liabilities were recognised in respect of all of these remaining undistributed earnings of subsidiaries this would result in an additional deferred tax liability and expense of approximately $1,076.5 million (31 December 2021 – $1,232.1 million), depending on the application of tax credits which may be available in particular circumstances. # **(ii) 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 of those agreements: - the Reko Diq project in Pakistan (the "Project") was reconstituted in Reko Diq Mining Company (Private Limited) ("RDMC"). RDMC is the Pakistani registered subsidiary of Tethyan Copper Company Pty Limited ("TCC"), which is itself the Australian registered subsidiary of Atacama Copper Pty Limited ("Atacama"), the joint venture company registered in Australia and owned equally by the Company and Barrick Gold Corporation ("Barrick"); - a consortium of various Pakistani state-owned enterprises acquired shares in RDMC which holds the Project (the "Sale"); and - as the International Centre for Settlement of Investment Disputes ("ICSID") award (to TCC) was resolved by reconstituting the Project, TCC no longer has any rights or claims against the Governments of Pakistan and Balochistan arising from the suspension of the Project in 2011. The proceeds of the Sale which, together with accrued interest up to 15 December 2022 totalled US$946.0 million, are currently held by Atacama in a segregated interest-bearing account. Antofagasta and Barrick have agreed that the proceeds of this account, including all further interest received, less any Australian tax arising, will be distributed to the Antofagasta Group during 2023, on a date to be determined by Antofagasta. Atacama is seeking a binding private ruling to confirm that the Sale proceeds and their distribution to the Antofagasta Group will not be subject to Australian tax. The Australian corporate tax rate is 30%. Although Antofagasta will retain its shareholding in Atacama until the proceeds have been distributed, it no longer has any appointees on the board of the joint venture, is not entitled to exercise voting rights in Atacama, and is not required to provide any funding to, or permitted to receive any distributions from, Atacama other than the Sale proceeds. Antofagasta has therefore ceased to have an economic interest in Atacama and its subsidiaries as of 15 December 2022 other than being entitled from that date to receive an amount equal to the Sale proceeds and related interest less any Australian tax arising (whether before or after the distribution). Accordingly, Antofagasta has recognised a gain on disposal of its investment in the joint venture as at 15 December 2022 of $944.7 million, reflecting the estimate of the Sale proceeds and related interest, working capital and other adjustments and the carrying value of the investment at that date. A receivable balance of $943.3 million in respect of the estimated proceeds due to Antofagasta has been recognised within Trade and other receivables in the balance sheet. In addition to the above estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities, we have also set out the following additional estimates and assumptions which have a significant impact on the financial statements, but which are not considered to be key sources of estimation uncertainty as defined in IAS 1. # **(i) Inventory valuation** The valuation of work in progress inventories involves a number of estimates, including the average ore grade, volume and density of ore stockpiles, and the recoveries in respect of material on the leach piles. Evaluating the net realisable value of the inventories also requires an estimate of the likely future copper price for the periods when it is expected that the inventories will be completed and sold. As set out in Note 20, the value of work in progress inventories at 31 December 2022 was $751.9 million. If the copper spot price at 31 December 2022 (used for forecasting the likely sales price of short-term inventories) had been 10% lower, this would not have resulted in any net realisable value provision. The valuation of leachpile inventories can be particularly complex, given the required estimates including in respect of the total recoveries and the speed of recovery in relation to the material on the piles. This is particularly the case with leachpiles with a long leaching cycle, where material may remain on the pile for several years before it has been fully leached. The operation with the most significant long-term leachpile inventory is Zaldivar, with a long-term leachpile with a value of approximately $130 million (on a 50% attributable basis) at 31 December 2022. This balance is forecast to be consumed over the operation's remaining 14 year mine life and its recoverability is based on the same assumptions about future operational considerations as detailed in note 5. As a simple, high-level sensitivity if this balance were reduced by 10% (due to changes in recovery estimates for example), this would result in a reduction in Zaldivar's inventory balance of approximately $13 million (on a 50% attributable basis). # **(ii) Useful economic lives of property, plant and equipment and ore reserves estimates** As explained in Note 2(L), mining properties, including capitalised financing costs, are depreciated in proportion to the volume of ore extracted in the year compared with total proven and probable reserves at the beginning of the year. There are numerous uncertainties inherent in estimating ore reserves, and assumptions that were valid at the time of estimation may change when new information becomes available. These include assumptions as to grade estimates and cut-off grades, recovery rates, commodity prices, exchange rates, production costs, capital costs, processing and reclamation costs and discount rates. The actual volume of ore extracted and any changes in these assumptions could affect prospective depreciation rates and carrying values. Antofagasta plc Annual Report 2022 193 Financial Statements / Notes to the financial statements *continued* ### 3 Critical accounting judgements and key sources of estimation uncertainty *continued* Other items of property, plant and equipment are depreciated over their useful economic lives, on a unit of production basis, in proportion to the volume of ore/material processed or hours of equipment usage, or on a straight-line basis. Management reviews the appropriateness of useful economic lives at least annually and, again, any changes could affect prospective depreciation rates and asset carrying values. The operation with the most significant depreciation expense is Centinela, with a depreciation expense of $710 million in 2022, representing approximately 60% of the total Group depreciation charge. As a simple high-level sensitivity, a 10% adjustment to the useful economic lives of Centinela's property, plant and equipment would result in an impact of approximately $71 million on the annual depreciation charge. #### (iii) Provisions for decommissioning and site restoration costs As explained in Note 2(Q), provision is made, based on net present values, for decommissioning and site rehabilitation costs as soon as the obligation arises following the development or ongoing production of a mining property. The provision is based on a closure plan prepared with the assistance of external consultants. Management uses its judgement and experience to provide for and (in the case of capitalised decommissioning costs) amortise these estimated costs over the life of the mine. The ultimate cost of decommissioning and site rehabilitation is uncertain and cost estimates can vary in response to many factors including changes to relevant legal requirements, the emergence of new restoration techniques or experience at other mine sites. The expected timing and extent of expenditure can also change, for example in response to changes in ore reserves or processing levels. As a result, there could be significant adjustments to the provisions established which would affect future financial results. Details of the decommissioning and restoration provisions are set out in Note 29. The total value of these provisions as at 31 December 2022 was $488.2 million. As a simple high-level sensitivity, a 10% increase in the forecast closure costs would increase the provision balance by approximately $49 million, the capitalised decommissioning costs asset within property, plant and equipment by approximately $17 million and the ongoing annual operating expenses by approximately $2 million. #### (iv) Deferred tax assets in respect of tax losses As explained in Note 2(O), deferred tax assets are recognised only to the extent that it is probable that they will be recovered through sufficient future taxable profits. When assessing the probable future taxable profits, the Group considers whether the relevant Group entity has sufficient taxable temporary differences which will result in taxable amounts against which the unused tax losses can be utilised. Generally under Chilean tax law most tax losses can be carried forward indefinitely, and so the expiry of tax losses is not typically an issue. The key assumptions to which the forecasts of the probable level of future taxable profits are most sensitive are future commodity prices, production levels and operating costs. As set out in Note 28, the Group has recognised $78.5 million of net deferred tax assets as at 31 December 2022, relating to tax losses, provisions and short-term timing differences. The deferred tax position includes $79.7 million (2021 – $90.6 million) of deferred tax assets in respect of tax losses available for offset against future profits. These losses may be carried forward indefinitely. ### 4 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 tax effect of items presented as exceptional is also classified as exceptional, as are material deferred tax adjustments that relate to more than one reporting period. 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. #### 2022 – 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 has 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. #### 2021 – Impairment of Twin Metals' assets Twin Metals Minnesota ("Twin Metals") is a wholly owned copper, nickel and platinum group metals (PGM) underground mining project, which holds copper, nickel, cobalt-PGM deposits in north-eastern Minnesota, US. In recent years, Twin Metals has been progressing its Mine Plan of Operations (MPO) and Scoping Environmental Assessment Worksheet Data Submittal, submitted in December 2019 to the US Bureau of Land Management (BLM) and Minnesota Department of Natural Resources (DNR), respectively. However, while the Twin Metals project was advancing through environmental review, several actions were taken by the federal government that have changed the potential scenarios for the project. In September 2021, the United States Forest Service (USFS) submitted an application to withdraw approximately 225,000 acres of land in the Superior National Forest from the scope of federal mineral leasing laws, subject to valid existing rights. In October 2021, the United States Bureau of Land Management (BLM) rejected Twin Metals' Preference Right Lease Applications (PRLAs) and Prospecting Permit Applications (PPAs). In January 2022, the United States Department of the Interior cancelled Twin Metals' MNES-1352 and MNES-1353 federal mineral leases. The PRLAs and federal mineral leases form a significant proportion of the mineral resources contained within Twin Metals' current project plan and, accordingly, it was determined that these events collectively represented an impairment trigger as at the 2021 balance sheet date. Prior to the resulting impairment assessment being performed, as at 31 December 2021, the Group had recognised an intangible asset of $150.1 million and property, plant and equipment of $27.5 million relating to the Twin Metals project. The intangible asset arose upon the acquisition in 2015 of Duluth Metals, which owned a 60% stake in the Twin Metals project, with the carrying value of the intangible asset reflecting the consideration paid for that acquisition. The property, plant and equipment balances reflected the historical cost of acquiring those assets. These carrying values prior to the impairment did not, therefore, reflect an estimate of the commercial potential of the project as at 31 December 2021. The Group believes that Twin Metals has a valid legal right to the mining leases and a strong case to defend its legal rights. Although the Group intends to pursue validation of those rights, considering the time and uncertainty related to any legal action to challenge the government decisions, an impairment was recognised as at 31 December 2021 in respect of the $177.6 million of intangible assets and property, plant and equipment relating to the Twin Metals project. #### 2021 – Recognition of previously unrecognised deferred tax assets At 31 December 2021, the Group recognised $90.6 million of previously unrecognised deferred tax assets relating to tax losses available for offset against future profits, reflecting the improved actual and forecast profitability of the relevant Group entity (Antucoya). 194 Antofagasta plc Annual Report 2022 The US dollar/Chilean peso exchange rate ### 5 Asset sensitivities The value of the assets is also sensitive to movements in the US There were no indicators of potential impairment, or reversal of previous dollar/Chilean peso exchange rate. A long-term exchange rate of impairments, for the Group’s non-current assets associated with its Ch$850/$1 has been used in the models considered as part of the mining operations at the 2022 year-end, and accordingly no impairment impairment indicator assessment. This compares with the long-term tests have been performed. The impairment indicator assessment exchange rate of CH$770/$1 used in 2021. As an additional down-side included consideration of the potential indicators set out in IAS 36, sensitivity an indicative valuation was prepared with a 10% stronger ‘Impairment of Assets’, which included quantitative analysis based on the long-term Chilean peso exchange rate assumption. Los Pelambres and operations’ life-of-mine models as adjusted for certain assumptions Centinela still showed positive headroom in this alternative down-side (including potential future development opportunities) (“the models”). scenario. However, the Antucoya valuation indicated a potential deficit of These models provide indicative valuations and do not represent, or $140 million and the Zaldívar valuation indicated a potential deficit of $100 comply with, a formal impairment assessment prepared in accordance million (on a 50% basis). As noted above, historically there has often with IAS 36. Sensitivity analyses have been performed on the models to been a correlation between movements in the copper price and the US quantify the impact of changes in assumptions to which the models are dollar/Chilean peso exchange rate, and so a strengthening of the Chilean most sensitive and to support the overall impairment indicator peso may often reflect a stronger copper price environment, which could assessment. mitigate the impact of a stronger exchange rate. As noted above, no qualitative indicators of potential impairment or Climate risks potential reversal of impairment were identified. Similarly, no quantitative The models incorporate estimates of the potential future costs relating to indicators of impairment were identified, with the models used within the climate risks. The Group discloses in line with the recommendations of impairment indicator assessment continuing to indicate positive the Task Force on Climate-related Financial Disclosures (“TCFD”). This headroom for all of the Group’s mining operations, including the Zaldivar process includes scenario analyses assessing the potential future impact joint venture, with the indicated value of the assets in excess of their of transition and physical risks. The combined estimate of the potential carrying value. costs of the transition risk and physical risk scenarios, have been Relevant aspects of this process are detailed below: incorporated into the models. Copper price outlook Chilean mining royalty The assumption to which the value of the assets is most sensitive is the We have considered potential changes to the Chilean mining royalty future long-term copper price. The copper price forecasts (representing (taking into account the Group’s existing tax stability agreements) as part the Group’s estimates of the assumptions that would be used by of the impairment indicator assessment. independent market participants in valuing the assets) are based on the Other relevant assumptions forward curve for the short term and consensus analyst forecasts for In addition to the impact of the future copper price the US dollar/Chilean the longer term. A long-term copper price of $3.50/lb (reflecting 2022 peso exchange rate, climate risks and the potential changes in the real terms) has been used in the models used in the impairment indicator Chilean royalty regime, the models used in the impairment indicator assessment, which has increased from $3.30/lb (reflecting 2021 real assessment are sensitive to the assumptions in respect of future terms) at the prior year-end. As an additional down-side sensitivity an production levels, operating costs, sustaining and development capital indicative valuation (based on the models) was performed with a long- expenditure, and the discount rate used to determine the present value of term copper price of $3.15/lb, reflecting a 10% reduction in the long-term the future cash flows. price forecast. Los Pelambres and Centinela still showed positive headroom in their models in this alternative down-side scenario. A real post-tax discount rate of 8% (calculated using relevant market However, the Antucoya valuation indicated a potential deficit of $400 data) has been used in determining the present value of the changes in million and the Zaldívar valuation indicated a potential deficit of $170 forecast future cash flows from the assets as part of the quantitative million (on a 50% basis). This was a simple sensitivity exercise, looking at analysis performed as part of the overall impairment indicator an illustrative change in the forecast long-term copper price in isolation. assessment. In reality, a deterioration in the long-term copper price environment is likely to result in corresponding improvements in a range of input cost factors. In particular, given that copper exports account for over 50% of Chile’s exports, historically there has often been a correlation between movements in the copper price and the US dollar/Chilean peso exchange rate, and a decrease in the copper price may therefore result in a weakening of the Chilean peso, with a resulting reduction in the Group’s operating costs and capital expenditure in US$ terms. These likely cost reductions, as well as potential operational changes which could be made in a weaker copper price environment, could partly mitigate the impact of the lower copper price modelled in these estimated potential sensitivities. Antofagasta plc Annual Report 2022 195 antofagasta.co.uk 195 Financial Statements / Notes to the financial statements continued ## 5 Asset sensitivities continued In the case of Zaldivar, in addition to the assumptions made in respect of the factors outlined above, the conclusion that there are no impairment indicators reflects certain assumptions about future operational considerations to which the model considered as part of the impairment indicator assessment is sensitive, in particular the following: - Zaldivar submitted an Environmental Impact Assessment (EIA) in 2018 which included an application to extend its water extraction and mining permits to 2029 (with decreasing activity levels in 2030-2031). Currently, Zaldivar is permitted to extract water and mine into 2025 and 2024, respectively. To ensure the continuity of the operation, in March 2023 Zaldivar submitted a EIA (Declaration of Environmental Impact), a more limited scope and simplified procedure than an EIA, requesting that the mining permit be extended from 2024 to 2025 so as to expire at the same date as the current water permit. At the same time Zaldivar withdrew the 2018 EIA application. It is expected that an alternative and updated EIA application to extend the water and mining permits beyond 2025 will be submitted which will also include a plan for a transition from the current continental water source on completion of the extended water permit, to either procuring water from a third party or using raw sea water. The impairment indicator assessment assumes that the mining permit will be extended to cover the full period of the model, and the water permit can be extended, or reasonable alternative arrangements for securing water to enable the continued operation of the mine without interruption can be implemented. However, if this is not the case, this is likely to be considered an indicator of a potential impairment, requiring an IAS 36 impairment assessment at that point. - Zaldivar'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 (a road, railway, power line and pipelines). The impairment indicator assessment assumes that mining of the final pit phase, which is subject to agreements or easements to access these areas and relocate this infrastructure, will be possible. The carrying value of the Group's investment in joint venture balance in respect of Zaldivar as at 31 December 2022 was $897.3 million. # Fair value less costs of disposal and value in use valuations If a full IAS 36 impairment test were to be prepared, which was not the case as at 31 December 2022, the recoverable amount is the higher of fair value less costs of disposal and value in use. Fair value less costs of disposal reflects the net amount the Group would receive from the sale of the asset in an orderly transaction between market participants. For mining assets, this would generally be determined based on the present value of the estimated future cash flows arising from the continued use, further development or eventual disposal of the asset. Value in use reflects the expected present value of the future cash flows which the Group would generate through the operation of the asset in its current condition, without taking into account potential enhancements or further development of the asset. The fair value less costs of disposal valuation will normally be higher than the value in use valuation for mining companies, and accordingly the Group typically applies this valuation estimate in its impairment or valuation assessments. # Indicators of potential reversal of previous impairments Antucoya recognised impairments totalling $716 million in 2012 and 2016. Of the original impairment amounts, approximately $434 million remains in effect unamortised as at 31 December 2022. Based on an assessment of both qualitative and quantitative factors, there were no indicators of a potential reversal of these previous impairments at the 2022 year-end. As noted above, the indicative valuation exercise for Antucoya at the 2022 year-end indicated positive headroom for Antucoya. However, the headroom position is relatively marginal – the down-side sensitivity reflecting a 10% reduction in the long-term copper price resulted in a potential deficit of $400 million; the sensitivity using a 10% stronger long-term Chilean peso exchange rate assumption indicated a potential deficit of $140 million. Given this marginal headroom position, reasonably possible changes in the general market environment or the regulatory and taxation environment in Chile could result in a potential deficit position for Antucoya and hence it was concluded that there was no impairment reversal trigger as at 31 December 2022. ## 6 Segment information The Group's reportable segments, which are the same as its operating segments, are as follows: - Los Pelambres - Centinela - Antucoya - Zaldivar - Exploration and evaluation - Corporate and other items - Transport division For management purposes, the Group is organised into two business divisions based on their products – Mining and Transport. The Mining division is split further for management reporting purposes to show results by mine and exploration activity. Los Pelambres produces primarily copper concentrate containing gold and silver as a by-product, and molybdenum concentrate. Centinela produces copper concentrate containing gold and silver as a by-product, molybdenum concentrates and copper cathodes. Antucoya and Zaldivar produce copper cathodes. The Transport division provides rail cargo and road cargo transport together with a number of ancillary services. All the operations are based in Chile. The Exploration and evaluation segment incurs exploration and evaluation expenses. "Corporate and other items" comprises costs incurred by the Company, Antofagasta Minerals SA, the Group's mining corporate centre and other entities, that are not allocated to any individual business segment. Consistent with its internal management reporting, the Group's corporate and other items are included within the Mining division. The chief operating decision-maker (the Group's Chief Executive Officer) monitors the operating results of the business segments separately for the purpose of making decisions about resources to be allocated and assessing performance. Segment performance is evaluated based on the operating profit of each of the segments. 196 Antofagasta plc Annual Report 2022 A) Segment revenues and results For the year ended 31 December 2022 | | | | | | | | | 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 2,558.9 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 3 Gain on disposal of investment in joint ventures – – – – – 944.7 944.7 – 944.7 Total profit from operations, associates and oint 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 1 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) 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 (Refer to the Alternative Performance Measures section on page 238). 2. Operating cash outflow in the exploration and evaluation segment was $98.3 million. 3. An exceptional gain of $944.7 million has been recognised in respect of the Group’s disposal of its investment in the Tethyan joint venture (see notes 3, 4 and 17) Antofagasta plc Annual Report 2022 197 j antofagasta.co.uk 197 Financial Statements / Notes to the Financial statements continued ### 6 Segment information continued For the year ended 31 December 2021 | | | | | | | | | 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 3,621.0 2,981.3 697.8 – – – 7,300.1 170.0 7,470.1 Operating cost excluding depreciation and loss on disposals (1,095.0) (1,062.0) (360.7) – (103.2) (76.0) (2,696.9) (106.3) (2,803.2) Depreciation (281.8) (654.7) (98.3) – – (13.0) (1,047.8) (30.9) (1,078.7) Loss on disposals (3.7) (4.0) (0.5) – – – (8.2) (1.0) (9.2) 4 Provision against the carrying value of assets – – – – (177.6) – (177.6) – (177.6) Operating profit/(loss) 2,240.5 1,260.6 238.3 – (280.8) (89.0) 3,369.6 31.8 3,401.4 Net share of results from associates and oint ventures – – – 68.5 – (9.0) 59.5 0.2 59.7 Investment income 1.4 1.5 0.3 – – 1.7 4.9 0.1 5.0 Interest expense (3.5) (16.4) (15.5) – – (27.2) (62.6) (0.8) (63.4) Other finance items 41.1 26.1 4.9 – – 5.1 77.2 (2.8) 74.4 Profit/(loss) before tax 2,279.5 1,271.8 228.0 68.5 (280.8) (118.4) 3,448.6 28.5 3,477.1 Tax (743.7) (382.0) (7.1) – – (188.3) (1,321.1) (11.8) (1,332.9) 3 Tax-exceptional items – – 90.6 – – – 90.6 – 90.6 Profit/(loss) for the year 1,535.8 889.8 311.5 68.5 (280.8) (306.7) 2,218.1 16.7 2,234.8 Non-controlling interests 607.5 252.2 84.4 – – 0.5 944.6 – 944.6 Profit/(losses) attributable to the owners of the parent 928.3 637.6 227.1 68.5 (280.8) (307.2) 1,273.5 16.7 1,290.2 1 EBITDA 2,526.0 1,919.3 337.1 172.8 (103.2) (84.0) 4,768.0 68.2 4,836.2 Additions to non-current assets Additions to property, plant and equipment 903.1 826.4 62.7 – 0.6 30.4 1,823.2 32.7 1,855.9 Segment assets and liabilities Segment assets 5,667.1 5,924.2 1,735.9 – – 2,661.1 15,988.3 384.3 16,372.6 Investment in associates and joint ventures – – – 900.0 – – 900.0 5.8 905.8 Segment liabilities (2,642.0) (1,797.0) (548.7) – – (1,174.5) (6,162.2) (87.2) (6,249.4) 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 (Refer to the Alternative Performance Measures section on page 238). 2. Operating cash outflow in the exploration and evaluation segment was $98.0 million. 3. During 2021, there was an exceptional item of $90.6 million which reflects the recognition of a deferred tax asset at Antucoya (see note 4). 4. An impairment has been recognised as at 31 December 2021 in respect of the $177.6 million of intangible assets and property, plant and equipment relating to the Twin Metals project, presented as an exceptional item. Notes to segment revenues and results (i) Inter-segment revenues are eliminated on consolidation. The only inter-segment revenue related to sales from the Transport division to the mining division of $9.8 million (year ended 31 December 2021 – $8.2 million), has been eliminated and is therefore not reflected in the above figures. (ii) Revenue includes provisionally priced sales of copper, gold and molybdenum concentrates and copper cathodes. Further details of such adjustments are given in Note 7. (iii) For sales of concentrates, which are sold to smelters and roasting plants for further processing into fully refined metal, the price of the concentrate (which is the amount recorded as revenue) 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. Treatment and refining charges for copper and molybdenum concentrates are detailed in Note 7. (iv) The effects of tax and non-controlling interests on the expenses within the Exploration and evaluation segment are allocated to the mine that the exploration work relates to. (v) The assets of the Transport division segment include $7.3 million (31 December 2021 – $5.8 million) relating to the Group’s 30% interest in Antofagasta Terminal International SA (“ATI”), which operates a concession to manage installations in the port of Antofagasta. Further details of these investments are set out in Note 16. Antofagasta plc Annual Report 2022198 j 198 Antofagasta Annual Report 2022 B) Entity-wide disclosures Revenue by product 2022 2021 $m $m Copper | • Los Pelambres | 2,107.7 3,097.0 | | --- | --- | | • Centinela concentrate | 1,132.7 1,735.4 | | • Centinela cathodes | 844.4 774.1 | | • Antucoya | 697.5 693.3 | Provision of shipping services | • Los Pelambres | 51.9 57.8 | | --- | --- | | • Centinela concentrate | 58.5 46.8 | | • Centinela cathodes | 6.7 4.3 | | • Antucoya | 6.0 4.5 | Gold • Los Pelambres 75.4 91.0 • Centinela concentrate 238.4 345.4 Molybdenum • Los Pelambres 291.4 329.2 • Centinela concentrate 100.8 37.2 Silver • Los Pelambres 32.5 46.0 • Centinela concentrate 24.7 38.1 Total 5,668.6 7,300.1 Transport division 193.4 170.0 5,862.0 7,470.1 Revenue by location of customer 2022 2021 $m $m Europe | • United Kingdom | 71.0 54.4 | | --- | --- | | • Switzerland | 753.6 1,303.7 | | • Spain | 1.0 67.6 | | • Germany | 140.0 121.5 | | • Rest of Europe | 96.5 177.4 | Latin America • Chile 369.1 282.0 • Rest of Latin America 179.7 214.7 North America • United States 312.3 666.5 Asia | • Japan | 1,668.6 1,842.3 | | --- | --- | | • China | 1,072.0 1,236.9 | | • Singapore | 423.8 726.1 | | • South Korea | 332.2 322.6 | | • Hong Kong | 178.2 217.1 | | • Rest of Asia | 264.0 237.3 | 5,862.0 7,470.1 Information about major customers In the year ended 31 December 2022, the Group’s mining revenue included $785.5 million related to one large customer that individually accounted for more than 10% of the Group’s revenue (year ended 31 December 2021 – one large customer representing $1,015.1 million). Antofagasta plc Annual Report 2022 199 antofagasta.co.uk 199 Financial Statements / Notes to the Financial statements continued ### 6 Segment information continued Non-current assets by location of assets 2021 2022 $m $m Restated Chile 12,786.1 11,705.1 1 Other 10.1 10.9 12,796.2 11,716.0 1. The comparatives have been restated to show a reclassification of $9.9 million from the “Chile” category to the “Other” category. 2022 2021 $m $m Non-current assets per the balance sheet 13,016.2 11,872.7 The above amounts by location reflect non-current assets per the balance sheet excluding: | • Deferred tax assets | (78.5) (96.8) | | --- | --- | | • Account receivables | (51.0) (51.2) | | • Equity investments | (90.5) (8.7) | Total of non-current assets above (220.0) (156.7) Non-current assets by location of asset 12,796.2 11,716.0 ### 7 Group Revenue Copper and molybdenum concentrate sale contracts and copper cathode sale contracts generally provide for provisional pricing of sales at the time of shipment, with final pricing being based on the monthly average London Metal Exchange copper price or monthly average molybdenum price for specified future periods. This normally ranges from one to four months after shipment to the customer. For sales contracts which contain provisional pricing mechanisms, the total receivable balance is measured at fair value through profit or loss. Gains and losses from the mark-to-market of open sales are recognised through adjustments to revenue in the income statement and to trade receivables in the balance sheet. The Group determines mark-to-market prices using forward prices at each period-end for copper concentrate and cathode sales, and period-end month average prices for molybdenum concentrate sales due to the absence of a futures market in the market price references for that commodity in the majority of the Group’s contracts. With sales of concentrates, which are sold to smelters and roasting plants for further processing into fully refined metal, the price of the concentrate (which is the amount recorded as revenue) 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. The shipping service represents a separate performance obligation, and is recognised separately from the sale of the material over time as the shipping service is provided. The total revenue from contracts with customers and the impact of provisional pricing adjustments in respect of concentrate and cathode sales is as follows: 2022 2021 $m $m Revenue from contracts with customers Sale of products 5,671.2 6,809.0 1 Provision of shipping services associated with the sale of products 123.1 113.4 2 Transport division 193.4 170.0 Provisional pricing adjustments in respect of copper, gold and molybdenum (125.7) 377.7 Total revenue 5,862.0 7,470.1 1. The Group sells a significant proportion of its products on Cost, Insurance & Freight (CIF) Incoterms, which means that the Group is responsible for shipping the product to a destination port specified by the customer. 2. The transport division provides rail and road cargo transport together with a number of ancillary services. Antofagasta plc Annual Report 2022200 200 Antofagasta Annual Report 2022 The categories of revenue which are principally affected by different economic factors are the individual product types. A summary of revenue by product is set out in Note 6. The following tables set out the impact of provisional pricing adjustments, derivative commodity instruments and treatment and refining charges for the more significant products. The revenue from these products, along with the revenue from other products and services, is reconciled to total revenue in Note 6. For the year ended 31 December 2022 | | Los Pelambres Copper concentrate $m | Centinela Copper concentrate $m | Centinela Copper cathodes $m | Antucoya Copper cathodes $m | Los Pelambres Gold in concentrate $m | Centinela Gold in concentrate $m | Los Pelambres Molybdenum concentrate $m | Centinela Molybdenum concentrate $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** | The revenue from the individual products shown in the above table excludes revenue from sales of silver and the transport division, which are presented in the revenue by product table in note 6 to reconcile to Group Revenue. 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. Antofagasta plc Annual Report 2022 201 Financial Statements / Notes to the Financial statements *continued* ## 7 Group Revenue *continued* For the year ended 31 December 2021 | | Los Pelambres Copper concentrate $m | Centinela Copper concentrate $m | Centinela Copper cathodes $m | Antucoya Copper cathodes $m | Los Pelambres Gold in concentrate $m | Centinela Gold in concentrate $m | Los Pelambres Molybdenum concentrate $m | Centinela Molybdenum concentrate $m | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | **Provisionally priced sales of products** | 2,966.6 | 1,685.3 | 824.3 | 749.7 | 93.3 | 354.8 | 322.1 | 38.4 | | **Revenue from freight services** | 57.8 | 46.8 | 4.3 | 4.5 | – | – | – | – | | | 3,024.4 | 1,732.1 | 828.6 | 754.2 | 93.3 | 354.8 | 322.1 | 38.4 | | **Effects of pricing adjustments to previous year invoices** | | | | | | | | | | Reversal of mark-to-market adjustments at the end of the previous year | (58.7) | (26.8) | 0.1 | (0.5) | – | (0.9) | 0.2 | (0.3) | | Settlement of sales invoiced in the previous year | 175.1 | 74.7 | 1.8 | 1.5 | (1.0) | (4.0) | 6.4 | 1.2 | | **Total effect of adjustments to previous year invoices in the current year** | 116.4 | 47.9 | 1.9 | 1.0 | (1.0) | (4.9) | 6.6 | 0.9 | | **Effects of pricing adjustments to current year invoices** | | | | | | | | | | Settlement of sales invoiced in the current year | 92.2 | 58.8 | 10.2 | 6.0 | (1.1) | (4.1) | 30.6 | 5.8 | | Mark-to-market adjustments at the end of the current year | 12.0 | 5.2 | 0.3 | 0.8 | – | 0.4 | (5.7) | (0.7) | | **Total effect of adjustments to current year invoices** | 104.2 | 64.0 | 10.5 | 6.8 | (1.1) | (3.7) | 24.9 | 5.1 | | Total pricing adjustments | 220.6 | 111.9 | 12.4 | 7.8 | (2.1) | (8.6) | 31.5 | 6.0 | | Realised losses on commodity derivatives | – | – | (62.6) | (64.2) | – | – | – | – | | **Revenues before deducting treatment and refining charges** | 3,245.0 | 1,844.0 | 778.4 | 697.8 | 91.2 | 346.2 | 353.6 | 44.4 | | Treatment and refining charges | (90.2) | (61.8) | – | – | (0.2) | (0.8) | (24.4) | (7.2) | | **Revenue net of tolling charges** | 3,154.8 | 1,782.2 | 778.4 | 697.8 | 91.0 | 345.4 | 329.2 | 37.2 | The revenue from the individual products shown in the above table excludes revenue from sales of silver and the transport division, which are presented in the revenue by product table in note 6 to reconcile to Group Revenue. 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. 202 Antofagasta plc Annual Report 2022 #### (I) Copper concentrate The typical period for which sales of copper concentrate remain open until settlement occurs is a range of approximately three to four months from shipment date. | | | | 2022 | | --- | --- | --- | --- | | Sales provisionally priced at the balance sheet date | Tonnes | **179,000** | 177,900 | | Average mark-to-market price | $/lb | **3.80** | 4.41 | | Average provisional invoice price | $/lb | **3.65** | 4.37 | #### (II) Copper cathodes The typical period for which sales of copper cathodes remain open until settlement occurs is approximately one month from shipment date. | | | | 2022 | | --- | --- | --- | --- | | Sales provisionally priced at the balance sheet date | Tonnes | **22,700** | 15,000 | | Average mark-to-market price | $/lb | **3.80** | 4.42 | | Average provisional invoice price | $/lb | **3.77** | 4.39 | #### (III) Gold in concentrate The typical period for which sales of gold in concentrate remain open until settlement occurs is approximately one month from shipment date. | | | | 2022 | | --- | --- | --- | --- | | Sales provisionally priced at the balance sheet date | Ounces | **31,000** | 32,300 | | Average mark-to-market price | $/oz | **1,828** | 1,801 | | Average provisional invoice price | $/oz | **1,742** | 1,791 | #### (IV) Molybdenum concentrate The typical period for which sales of molybdenum remain open until settlement occurs is approximately two months from shipment date. | | | | 2022 | | --- | --- | --- | --- | | Sales provisionally priced at the balance sheet date | Tonnes | **2,500** | 2,400 | | Average mark-to-market price | $/lb | **26.10** | 18.60 | | Average provisional invoice price | $/lb | **22.20** | 19.65 | As detailed above, the effects of gains and losses from the marking-to-market of open sales are recognised through adjustments to revenue in the income statement and to trade debtors in the balance sheet. The effect of mark-to-market adjustments on the balance sheet at the end of each period are as follows: | | Effect on debtors of year end mark-to-market adjustments | | | --- | --- | --- | | | 2022 $m | 2021 $m | | Los Pelambres – copper concentrate | **38.0** | 12.0 | | Los Pelambres – molybdenum concentrate | **12.6** | (5.7) | | Centinela – copper concentrate | **19.9** | 5.2 | | Centinela – molybdenum concentrate | **7.6** | (0.7) | | Centinela – gold in concentrate | **2.7** | 0.4 | | Centinela – copper cathodes | **0.8** | 0.3 | | Antucoya – copper cathodes | **0.8** | 0.8 | | | **82.4** | 12.3 | Antofagasta plc Annual Report 2022 203 Financial Statements / Notes to the Financial statements *continued* ## 8 Operating Profit From Subsidiaries, and Total Profit From Associates And Joint Ventures Operating profit from subsidiaries and total profit from operations and associates and joint ventures is derived from Group revenue by deducting operating costs as follows: | | 2022 $m | 2021 $m | | --- | --- | --- | | **Group revenue** | **5,862.0** | 7,470.1 | | Cost of sales | (3,432.7) | (3,120.2) | | **Gross profit** | **2,429.3** | 4,349.9 | | Administrative and distribution expenses | (558.9) | (550.4) | | Other operating income | 37.9 | 31.8 | | Other operating expenses^{1} | (274.0) | (429.9) | | **Operating profit from subsidiaries** | **1,634.3** | 3,401.4 | | Net share of profit of associates and joint ventures | 48.1 | 59.7 | | Gain on disposal of investment in joint ventures | 944.7 | – | | **Total profit from operations, associates and joint ventures** | **2,627.1** | 3,461.1 | 1. Other operating expenses comprise $113.0 million of exploration and evaluation expenditure (2021 – $103.2 million), $19.1 million in respect of the employee severance provision (2021 – $19.8 million), $16.9 million in respect of the closure provision (2021 – $11.3 million), nil in respect of the provision against the carrying value of assets relating to the Twin Metals project (2021 – $177.6 million) and $125.0 million of other expenses (2021 – $118.0 million). Profit before tax is stated after (charging)/crediting: | | 2022 $m | 2021 $m | | --- | --- | --- | | Foreign exchange (losses)/gains | | | | • included in net finance costs | (12.8) | 49.9 | | Depreciation of property, plant and equipment | | | | • owned assets | (1,047.2) | (997.1) | | • leased assets | (93.9) | (81.6) | | Loss on disposal of property, plant and equipment | (2.1) | (9.2) | | Cost of inventories recognised as an expense | (2,381.6) | (2,033.0) | | Employee benefit expense | (476.6) | (498.0) | | Decommissioning and restoration (operating expenses) | (16.9) | (11.3) | | Severance charges | (19.1) | (19.8) | | Exploration and evaluation expense | (113.0) | (103.2) | | Provision against carrying value of assets^{1} | – | (177.6) | | Auditors' remuneration | (2.2) | (1.9) | 1. In 2021 impairment provision recognised in respect of $27.5 million of property, plant and equipment (note 15) and $150.1 million of intangible assets (note 14) relating to the Twin Metals project. A more detailed analysis of auditors' remuneration on a worldwide basis is provided below: | Group | 2022 $000 | 2021 $000 | | --- | --- | --- | | Fees payable to the Company's auditors and its associates for the audit of the Parent Company and consolidated financial statements | 1,312.5 | 1,242.0 | | Fees payable to the Company's auditors and its associates for other services: | | | | • The audit of the Company's subsidiaries | 549.6 | 415.0 | | • Audit-related assurance services^{1} | 98.0 | 200.0 | | • Other assurance services^{2} | 241.0 | – | | | **2,201.1** | 1,857.0 | 1. The audit-related assurance services relate to the half-year review performed by the auditors. 2. The other assurance services in 2022 related to the bond issue in that year, which required the Group to engage PwC to act as the reporting accountant for that transaction, work which is in effect required to be performed by the Group's auditors. Details of the Company's policy on the use of auditors for non-audit services: the reason why the auditor was used rather than another supplier and how the auditor's independence and objectivity was safeguarded are set out in the Audit and Risk Committee report on page 130. No services were provided pursuant to contingent fee arrangements. 204 Antofagasta plc Annual Report 2022 ### 9 Employees A) Average monthly number of employees 2022 2021 Number Number Los Pelambres 1,069 959 Centinela 2,408 2,226 Antucoya 852 817 Exploration and evaluation 60 71 Corporate and other employees | • Chile | 582 566 | | | --- | --- | --- | | • United Kingdom | | 4 4 | | • Other | | 1 4 | Mining and Corporate 4,976 4,647 Transport division 1,383 1,336 6,359 5,983 (i) The average number of employees for the year includes all the employees of subsidiaries. The average number of employees does not include contractors who are not directly employed by the Group. (ii) The average number of employees does not include employees from associates and joint ventures. B) Aggregate remuneration The aggregate remuneration of the employees included in the table above was as follows: | | | 2022 | | 2021 | | --- | --- | --- | --- | --- | | | | $m | | $m | | Wages and salaries (448.5) | | | (469.9) | | | Social security costs (28.1) | | | | (28.1) | | | (476.6) | | (498.0) | | C) Key management personnel In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, including any Directors (Executive and Non-Executive) of the Company. Key management personnel who are not Directors have been identified as responsible senior management at the Corporate Centre and those responsible for the running of the key business divisions of the Group. Compensation for key management personnel (including Directors) was as follows: | | 2022 | 2021 | | --- | --- | --- | | | $m | $m | | Salaries and short-term employee benefits (25.0) | | (40.1) | | | (25.0) | (40.1) | Disclosures on Directors’ remuneration required by Schedule 8 of the Large and Medium-sized Companies and Group (Financial Statement) Regulations 2008, including those specified for audit by that Schedule, are included in the Remuneration report on pages 155 to 162. Antofagasta plc Annual Report 2022 205 antofagasta.co.uk 205 Financial Statements / Notes to the Financial statements continued ### 10 Net finance (Expense)/Income 2022 2021 $m $m Investment income Interest income 19.8 3.4 Gains on liquid investments held at fair value through profit or loss 20.4 1.6 40.2 5.0 Interest expense Interest expense (78.6) (63.4) (78.6) (63.4) Other finance items Unwinding of discount on provisions (16.9) (6.2) Adjustment to provision discount rates – 30.8 Effects of changes in foreign exchange rates (12.8) 49.9 Preference dividends (0.1) (0.1) (29.8) 74.4 Net finance (expense)/income (68.2) 16.0 During 2022, amounts capitalised and consequently not included within the above table were as follows: $47.0 million at Los Pelambres (year ended 31 December 2021 – $12.1 million) and $2.0 million at Centinela (year ended 31 December 2021 – $2.1 million). The interest expense shown above includes $7.1 million in respect of leases (2021 – $7.9 million). The interest paid in respect of leases $6.0 million (2021 – $6.5 million). ### 11 Income tax expense The tax charge for the year comprised the following: 2022 2021 $m $m Current tax charge | • Corporate tax (principally first category tax in Chile) | (340.4) (560.8) | | --- | --- | | • Mining tax (royalty) | (83.9) (250.0) | | • Withholding tax | (24.5) (224.7) | (448.8) (1,035.5) Deferred tax charge | • Corporate tax (principally first category tax in Chile) | (96.5) (237.4) | | --- | --- | | • Mining tax (royalty) | (9.8) 0.9 | | • Withholding tax | (48.5) 29.7 | (154.8) (206.8) Total tax charge (603.6) (1,242.3) The rate of first category (ie corporate) tax in Chile is 27.0% (2021 – 27.0%). In addition to first category tax and the mining tax, the Group incurs withholding taxes on any remittance of profits from Chile. Withholding tax is levied on remittances of profits from Chile at 35% less first category (ie corporate) tax already paid in respect of the profits to which the remittances relate. The Group’s mining operations are also subject to a mining tax (royalty). Production from Los Pelambres, Antucoya, Encuentro (oxides), the Tesoro North East pit and the Run-of-Mine processing at Centinela Cathodes is subject to a rate of between 5–14%, depending on the level of operating profit margin, and production from Centinela Concentrates and the Tesoro Central and Mirador pits at Centinela Cathodes is subject to a rate of 5% of taxable operating profit. The following table provides a numerical reconciliation between the accounting profit before tax multiplied by the applicable statutory tax rate and the total tax expense (including both current and deferred tax). Antofagasta plc Annual Report 2022206 206 Antofagasta Annual Report 2022 | | | Year ended | | | Year ended | | | Year ended | | | | Year ended | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 31 December 2022 | | | 31 December 2022 | | | 31 December 2021 | | | | 31 December 2021 | | | | | Excluding exceptional | | | Including exceptional | | | Excluding exceptional | | | | Including exceptional | | | | | | | items | | | items | | | items | | | | items | | $m % $m % | | | | | | | | $m % | | $m % | | | | Profit before tax 1,614.2 2,558.9 3,654.7 3,477.1 Profit before tax multiplied by Chilean corporate tax rate of 27% (435.9) 27.0 (691.0) 27.0 (986.8) 27.0 (938.8) 27.0 Mining tax (royalty) (94.5) 5.8 (94.5) 3.7 (243.8) 6.7 (243.8) 7.0 % Deduction of mining tax (royalty) as an allowable expense in determination of first category tax 23.1 (1.4) 23.1 (0.9) 67.8 (1.9) 67.8 (1.9) Items not deductible from first category tax (33.9) 2.1 (33.9) 1.3 (31.6) 0.9 (31.6) 0.9 Adjustment in respect of prior years (2.6) 0.1 (2.6) 0.1 (12.1) 0.3 (12.1) 0.3 Withholding tax (73.0) 4.6 (73.0) 2.9 (195.0) 5.3 (195.0) 5.6 Tax effect of share of profit of associates and joint ventures 13.0 (0.8) 13.0 (0.5) 16.1 (0.4) 16.1 (0.5) Impact of previously unrecognised tax losses on current tax 0.2 – 0.2 – 52.5 (1.4) 52.5 (1.5) Impact of recognition of previously unrecognised tax losses on deferred tax – – –– – – 90.6 (2.6) Provision against carrying value of assets – – –– – – (48.0) 1.4 Gain on disposal of investment in joint venture – – 255.1 (10.0) – – – – Tax expense and effective tax rate for the year (603.6) 37.4 (603.6) 23.6 (1,332.9) 36.5 (1,242.3) 35.7 The effective tax rate excluding exceptional items of 37.4% varied from the statutory rate principally due to the mining tax (royalty) (net impact of $71.4 million/4.4% including the deduction of the mining tax (royalty) as an allowable expense in the determination of first category tax), the withholding tax relating to the remittance of profits from Chile (impact of $73.0 million/4.6%), items not deductible for Chilean corporate tax purposes, principally the funding of expenses outside of Chile (impact of $33.9 million/2.1%), adjustments in respect of prior years (impact of $2.6 million/0.1%) and the impact of previously unrecognised tax losses (impact of $0.2 million/0%), partly offset by the impact of the recognition of the Group’s share of profit from associates and joint ventures, which are included in the Group’s profit before tax net of their respective tax charges (impact of $13.0 million/0.8%). The impact of the exceptional items on the effective tax rate including exceptional items was $255.1 million/10.0%. Further details of the exceptional gain on the disposal of the Group’s investment in the Tethyan joint venture, including relevant tax aspects, are set out in Note 17. The main factors which could impact the sustainability of the Group’s existing effective tax rate are: • In October 2022, the Chilean government announced its updated proposals for a comprehensive reform of the tax system, including proposed changes to the mining royalty. These proposals are subject to review and approval by the Chilean Congress, and so there is no certainty as to the exact nature of changes which may finally be enacted into law. • The level of future distributions made by the Group’s Chilean subsidiaries out of Chile, which could result in increased withholding tax charges. When determining whether it is likely that distributions will be made in the foreseeable future, and what is the appropriate foreseeable future period for this purpose, the Group considers factors such as the predictability of the likely future Group dividends, taking into account the Group’s dividend policy and the level of potential volatility of the Group’s future earnings, as well as the current level of distributable reserves at the Antofagasta plc entity level. • The impact of expenses which are not deductible for Chilean first category tax. Some of these expenses are fixed costs, and so the relative impact of these expenses on the Group’s effective tax rate will vary depending on the Group’s total profit before tax in a particular year. The implementation of the OECD BEPS Pillar 2, which would introduce a minimum effective tax rate of 15% for multinational companies, will be applicable to the Group when brought into relevant legislation. The Group’s operations are based in Chile and therefore currently subject to the Chilean first category (corporate) tax rate of 27%, plus withholding taxes on any remittance of profits from Chile. The Group has been assessing the potential impact of the draft UK legislation, and will complete that assessment when the legislation has been finalised. There are no significant tax uncertainties which would require critical judgements, estimates or potential provisions other than deferred tax judgements and estimates as explained in Note 3B. Antofagasta plc Annual Report 2022 207 antofagasta.co.uk 207 Financial Statements / Notes to the Financial statements continued ### 12 Earnings per share 2022 2021 $m $m Profit for the period attributable to owners of the parent (excluding exceptional items) 588.3 1,404.4 Exceptional Items 944.7 (114.2) Profit for the period attributable to owners of the parent (including exceptional items) from operations 1,533.0 1,290.2 2022 2021 Number Number Ordinary shares in issue throughout each year 985,856,695 985,856,695 2022 2021 cents cents Basic earnings per share (excluding exceptional items) from operations 59.7 142.5 Basic earnings per share (exceptional items) from operations 95.8 (11.6) Basic earnings per share (including exceptional items) from operations 155.5 130.9 Basic earnings per share are calculated as profit after tax and non-controlling interests, based on 985,856,695 (2021: 985,856,695) ordinary shares. There was no potential dilution of earnings per share in either year set out above, and therefore diluted earnings per share did not differ from basic earnings per share as disclosed above. Reconciliation of basic earnings per share from continuing operations: 2022 2021 Profit for the year attributable to owners of the parent $m 1,533.0 1,290.2 Profit from continuing operations attributable to owners of the parent $m 1,533.0 1,290.2 Ordinary shares Number 985,856,695 985,856,695 Basic earnings per share from continuing operations cents 155.5 130.9 ### 13 Dividends Amounts recognised as distributions to equity holders in the year: | | | | | 2022 | | 2021 | | --- | --- | --- | --- | --- | --- | --- | | 2 0 | 2 2 | 2021 | | cents | | cents | | | $ m | $m | per share | | per share | | Final dividend paid in June (proposed in relation to the previous year) • Ordinary 1,172.2 478.1 118.9 48.5 Interim dividend paid in September | | 2 0 | 2 2 | | --- | --- | --- | | | | $ m | | • Ordinary | 90.7 232.7 9.2 23.6 | | 1,262.9 710.8 128.1 72.1 The recommended final dividend for each year, which is subject to approval by shareholders at the Annual General Meeting and has therefore not been included as a liability in these financial statements, is as follows: | | | | | 2022 | | 2021 | | --- | --- | --- | --- | --- | --- | --- | | 2 0 | 2 2 | 2021 | | cents | | cents | | | $ m | $m | per share | | per share | | Final dividend proposed in relation to the year • Ordinary 497.6 1,172.1 50.5 118.9 2 0 2 2 Total dividends proposed in relation to 2022 (including the interim dividend) are 59.7 cents per share or $588.3 million (2021 – 142.5 cents per share $ m or $1,404.8 million). In accordance with IAS 32, preference dividends have been included within net finance expense (see Note 10) and amounted to $0.1 million (2021 – $0.1 million). Further details of the currency election timing and process (including the default currency of payment) are available on the Antofagasta plc website (www.antofagasta.co.uk) or from the Company’s registrar, Computershare Investor Services PLC on +44 370 702 0159. Further details relating to dividends for each year are given in the Directors’ Report on page 168. Antofagasta plc Annual Report 2022208 208 Antofagasta Annual Report 2022 ### 14 Intangible assets Accumulated depreciation and Cost 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) – The intangible asset relates to Twin Metals’ mining licences assets (included within the corporate segment). As explained in note 3, a full impairment provision was recognised in respect of the $150.1 million cost of this asset as at 31 December 2021, as a result of the US federal government’s cancellation of certain of Twin Metals’ mining leases. Twin Metals believes it has a valid legal right to the mining leases and a strong case to defend its legal rights. Although the Group is pursuing validation of those rights, considering the time and uncertainty related to any legal action to challenge the government decisions, a full impairment provision has been recognised in respect of the carrying value of the asset. Antofagasta plc Annual Report 2022 209 antofagasta.co.uk 209 Financial Statements / Notes to the Financial statements *continued* ## 15 Property, plant and equipment | | Land $m | Mining properties $m | Stripping costs $m | Buildings and infrastructure $m | Railway track $m | Wagons and rolling stock $m | Machinery, equipment and others $m | Assets under construction $m | Right-of- use assets $m | Total $m | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | **Cost** | | | | | | | | | | | | **At 1 January 2021** | 61.9 | 667.5 | 2,305.0 | 5,928.1 | 108.3 | 208.0 | 7,266.9 | 1,666.6 | 458.9 | 18,671.2 | | Additions | – | 4.5 | 502.5 | – | – | – | 3.9 | 1,283.2 | 61.8 | 1,855.9 | | Additions – capitalised depreciation | – | – | 72.0 | – | – | – | – | – | – | 72.0 | | Adjustment to capitalised decommissioning provisions | – | – | – | (119.9) | – | – | – | – | – | (119.9) | | Capitalisation of interest | – | – | – | – | – | – | – | 14.2 | – | 14.2 | | Capitalisation of critical spare parts | – | – | – | – | – | – | 0.9 | – | – | 0.9 | | Reclassifications | – | – | – | 1.4 | 14.5 | 5.8 | 4.7 | (26.6) | (2.8) | (3.0) | | Asset disposals | – | – | – | (5.7) | – | (7.3) | (32.0) | (8.2) | (17.6) | (70.8) | | **At 31 December 2021** | 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 | | **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 | | **Accumulated depreciation and impairment** | | | | | | | | | | | | **At 1 January 2021** | – | (562.1) | (1,117.1) | (2,613.6) | (38.5) | (100.8) | (4,139.8) | – | (247.4) | (8,819.3) | | Charge for the year | – | (26.0) | (255.3) | (274.1) | (5.9) | (17.1) | (418.7) | – | (81.6) | (1,078.7) | | Depreciation capitalised in inventories | – | – | – | – | – | – | 54.1 | – | – | 54.1 | | Depreciation capitalised in property, plant and equipment | – | – | – | – | – | – | (72.0) | – | – | (72.0) | | Reclassifications | – | – | – | – | – | – | – | – | 1.4 | 1.4 | | Impairment | (25.0) | – | – | (2.2) | – | – | (0.3) | – | – | (27.5) | | Asset disposals | – | – | – | – | – | 6.4 | 36.0 | – | 17.6 | 60.0 | | **At 31 December 2021** | (25.0) | (588.1) | (1,372.4) | (2,889.9) | (44.4) | (111.5) | (4,540.7) | – | (310.0) | (9,882.0) | | **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, plant and equipment | – | – | – | – | – | – | (73.3) | – | – | (73.3) | | Asset disposals | – | – | – | 0.1 | – | 0.6 | 7.6 | – | 17.4 | 25.7 | | **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) | | **Net book value** | | | | | | | | | | | | **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 | | At 31 December 2021 | 36.9 | 83.9 | 1,507.1 | 2,914.0 | 78.4 | 95.0 | 2,703.7 | 2,929.2 | 190.3 | 10,538.5 | The Group has no (2021 – nil) assets pledged as security against bank loans provided to the Group. At 31 December 2022, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to $845.1 million (2021 – $599.3 million) of which $445.4 million was related to Los Pelambres and $326.1 million to Centinela. The average interest rate for the amounts capitalised was 2.8% (2021 – 1.9%). At 31 December 2022, the net book value of assets capitalised relating to the decommissioning provision was $212.1 million (2021 – $49.7 million). Depreciation capitalised in property, plant and equipment of $73.3 million related to the depreciation of assets used in mine development (operating stripping) at Centinela, Los Pelambres and Antucoya (2021 – $72.0 million). The Right-of-use assets includes office lease, vehicles, machinery and equipment. Expenses related to leases of low-value assets not shown as leases (included in operating costs) are $25.1 million for 2022 (2021 – $17.8 million). As explained in note 4, an impairment provision was recognised in 2021 for $27.5 million of property, plant and equipment relating to the Twin Metals project. 210 Antofagasta plc Annual Report 2022 ### 16 Investments in subsidiaries The subsidiaries of the Group, the percentage of equity owned and the main country of operation are set out below. These interests are consolidated within these financial statements. | | | | | | Economic | | Economic | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Country of | Country of | Registered | | | interest at | | interest at | | | incorporation | operations | | office | Nature of business | | 2022 | | 2021 | Direct subsidiaries of the Parent Company Antofagasta Railway Company plc UK Chile 1 Railway 100% 100% The Andes Trust Limited UK UK 1 Investment 100% 100% (i) Andean LFMA Investment Limited UK Chile 1 Investment 100% 100% Andes Re Limited Bermuda Bermuda 4 Insurance 100% 100% Alfa Estates Limited Jersey Jersey 3 Investment 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 SA Chile Chile 2 Mining 100% 100% Energía Andina Geothermal SpA Chile Chile 2 Energy 100% 100% MLP Transmisión SA Chile Chile 2 Energy 100% 100% (ii) Sociedad Contractual Minera El Encierro Chile Chile 2 Mining 56.54% – Northern Minerals Investment (Jersey) Limited Jersey Jersey 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 12 Investment 100% 100% Duluth Exploration (USA) Inc USA USA 13 Investment 100% 100% DMC LLC (Minnesota) USA USA 12 Investment 100% 100% DMC (USA) LLC (Delaware) USA USA 12 Investment 100% 100% DMC (USA) Corporation USA USA 12 Investment 100% 100% Antofagasta Investment Company Limited UK UK 1 Investment 100% 100% Minprop Limited Jersey Jersey 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 Australia Australia 9 Mining 100% 100% Minera Anaconda Peru SA 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 14 Investment 100% 100% El Tesoro (SPV Bermuda) Limited Bermuda Bermuda 4 Investment 100% 100% Antofagasta Minerals Canada Canada Canada 9 Agency 100% 100% Antofagasta Minerals (Shanghai) Co. Limited China China 15 Agency 100% 100% Andes Investments Company (Jersey) Limited Jersey Jersey 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% Antofagasta plc Annual Report 2022 211 antofagasta.co.uk 211 Financial Statements / Notes to the Financial statements continued | | | | | Economic | | Economic | | | --- | --- | --- | --- | --- | --- | --- | --- | | Country of | Country of | Registered | | interest at | | interest at | | | incorporation | operations | | office Nature of business | | 2022 | | 2021 | 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% Community Fundación Minera Los Pelambres Chile Chile 2 development 100% 100% Inversiones Punta de Rieles Limitada Chile Chile 11 Investment 100% 100% Ferrocarril Antofagasta a Bolivia Chile Chile 11 Railway 100% 100% Inversiones Chilean Northern Mines Limitada Chile Chile 11 Investment 100% 100% The Andes Trust Chile SA Chile Chile 11 Investment 100% 100% Forestal SA Chile Chile 11 Forestry 100% 100% Servicios de Transportes Integrados Limitada Chile Chile 11 Road transport 100% 100% Inversiones Train Limitada Chile Chile 11 Investment 100% 100% Servicios Logisticos Capricornio Limitada Chile Chile 11 Transport 100% 100% Embarcadores Limitada Chile Chile 11 Transport 100% 100% FCAB Ingenieria y Servicios DosLimitada Chile Chile 11 Transport 100% 100% Inmobiliaria Parque Estación S.A. Chile Chile 11 Real Estates 100% 100% Emisa Antofagasta SA Chile Chile 11 Transport 100% 100% (i) Name change from Chilean Northern Mines Limited to Andean LFMA Investment Limited (ii) Sociedad Contractual Minera El Encierro is a newly incorporated Group entity Registered offices: 1 103 Mount Street, London, W1K 2TJ, UK 2 Avenida Apoquindo N° 4001, Piso 18, Las Condes, Santiago, Chile 3 22 Grenville Street, St Helier, Jersey, JE4 8PX3, Channel Islands 4 Crawford House, 50 Cedar Avenue, Hamilton HM 11, Bermuda 5 1209 Orange Street, Wilmington, DE 19801, USA 6 6040 Earle Brown Drive, 480 Brooklyn Center, MN 55430, USA 7 161 Bay Street, Suite 4320, Toronto, Ontario, M5J 2S1, Canada 8 PO Box 958, Road Town, Tortola VG1110, British Virgin Islands 9 Riparian Plaza, Level 28, 71 Eagle Street, Brisbane, Qld 4001, Australia 10 Avenida Paseo de la Republica Nº 3245 Piso 3, Lima, Peru 11 Simon Bolivar 255, Antofagasta, Chile 12 6041 Earle Brown Drive, 480 Brooklyn Center, MN 55430, USA 13 1010 Dale Street N, St Paul, MN 55117-5603, USA 14 2711 Centerville Road, Suite 400, Wilmington, DE 19808, USA 15 Unit 3309, IFC 2, 8 Century Avenue, Shanghai, China With the exception of the Antofagasta Railway Company plc, all of the above Group companies have only one class of ordinary share capital in issue. The Antofagasta Railway Company plc has ordinary and preference share capital in issue, with the ordinary share capital representing 76% of the Company’s total share capital, and the preference share capital representing 24%. Antofagasta plc holds 100% of both the ordinary and preference shares. The proportion of voting rights is proportional to the economic interest for the companies listed above. Antofagasta plc Annual Report 2022212 212 Antofagasta Annual Report 2022 ### 17 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 of those agreements: • the Reko Diq project in Pakistan (the “Project”) was reconstituted in Reko Diq Mining Company (Private Limited) ("RDMC"). RDMC is the Pakistani registered subsidiary of Tethyan Copper Company Pty Limited ("TCC"), which is itself the Australian registered subsidiary of Atacama Copper Pty Limited (“Atacama”), the joint venture company registered in Australia and owned equally by the Company and Barrick Gold Corporation ("Barrick"); • a consortium of various Pakistani state-owned enterprises acquired shares in RDMC which holds the Project (the "Sale"); and • as the International Centre for Settlement of Investment Disputes ("ICSID") award (to TCC) was resolved by reconstituting the Project, TCC no longer has any rights or claims against the Governments of Pakistan and Balochistan arising from the suspension of the Project in 2011. The proceeds of the Sale which, together with accrued interest up to 15 December 2022 totalled US$946.0 million, are currently held by Atacama in a segregated interest-bearing account. Antofagasta and Barrick have agreed that the proceeds of this account, including all further interest received, less any Australian tax arising, will be distributed to the Antofagasta Group during 2023, on a date to be determined by Antofagasta. Atacama is seeking a binding private ruling to confirm that the Sale proceeds and their distribution to the Antofagasta Group will not be subject to Australian tax. The Australian corporate tax rate is 30%. Although Antofagasta will retain its shareholding in Atacama until the proceeds have been distributed, it no longer has any appointees on the board of the joint venture, is not entitled to exercise voting rights in Atacama, and is not required to provide any funding to, or permitted to receive any distributions from, Atacama other than the Sale proceeds. Antofagasta has therefore ceased to have an economic interest in Atacama and its subsidiaries as of 15 December 2022 other than being entitled from that date to receive an amount equal to the Sale proceeds and related interest less any Australian tax arising (whether before or after the distribution). Accordingly, Antofagasta has recognised a gain on disposal of its investment in the joint venture as at 15 December 2022 of $944.7 million, reflecting the Sale proceeds and related interest, working capital and other adjustments and the carrying value of the investment at that date. A receivable balance of $943.3 million in respect of the estimated proceeds due to Antofagasta has been recognised within Trade and other receivables in the balance sheet. ### 18 Investment in associates and joint ventures | | | 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 Obligations on behalf of JV and associates at the end of the year – – – – | | | Minera | | Tethyan | | | | --- | --- | --- | --- | --- | --- | --- | | ATI (i) | Zaldívar (ii) | | | Copper (iii) | | Total | | 2021 | | 2021 | | | 2021 | 2021 | | $m | | | $m | | $m | $m | Balance at the beginning of the year 5.6 909.0 – 914.6 Obligations on behalf of JV and associates at the beginning of the year – – (1.1) (1.1) Capital contribution – – 9.5 9.5 Share of profit/(loss) before tax 0.2 99.0 (9.0) 90.2 Share of tax – (30.5) – (30.5) Share of profit/(loss) from JV and associates 0.2 68.5 (9.0) 59.7 Dividends receivable – (77.5) – (77.5) Balance at the end of the year 5.8 900.0 – 905.8 Obligations on behalf of JV and associates at the end of the year – – (0.6) (0.6) The investments, which are included in the $904.6 million balances at 31 December 2022, are set out below: Investment in associates (i) The Group’s 30% interest in Antofagasta Terminal Internacional (“ATI”), which operates a concession to manage installations in the port of Antofagasta. Investment in joint ventures (ii) The Group’s 50% interest in Minera Zaldívar SpA (“Zaldívar”). (iii) The Group had a 50% interest in Tethyan Copper Company Limited (“Tethyan”), which was a joint venture with Barrick Gold Corporation in respect of the Reko Diq project in the Islamic Republic of Pakistan (“Pakistan”). As explained in Note 17, on 15 December 2022 Antofagasta entered into definitive agreements to exit its interest in the Tethyan joint venture and is therefore no longer recognised as a joint venture by the Group. Antofagasta plc Annual Report 2022 213 antofagasta.co.uk 213 Financial Statements / Notes to the Financial statements continued ### 18 Investment in associates and joint ventures continued As the net carrying value of the interest in Tethyan was negative, it was included within non-current liabilities, as the Group was liable for its share of the joint venture’s obligations. Summarised financial information for the associates is as follows: | ATI | ATI | | --- | --- | | 2022 | 2021 | | $m | $m | Cash and cash equivalents 0.4 1.2 Current assets 18.2 13.7 Non-current assets 91.8 99.3 Current liabilities (19.3) (22.5) Non-current liabilities (69.5) (75.0) Revenue 55.2 47.2 Profit from continuing operations 5.1 1.3 Total comprehensive income 5.1 1.3 Summarised financial information for the joint ventures is as follows: Minera | Zaldívar | | Total | | --- | --- | --- | | | 2022 | 2022 | | | $m | $m | Cash and cash equivalents 70.1 70.1 1 Current assets 661.8 661.8 Non-current assets 1,658.6 1,658.6 Current financial liabilities (excluding trade, other payables and provisions) (53.2) (53.2) Current liabilities (159.3) (159.3) Non-current financial liabilities (excluding trade, other payables and provisions) (68.3) (68.3) Non-current liabilities (203.3) (203.3) Revenue 783.4 783.4 Depreciation and amortisation (149.2) (149.2) Interest income 1.5 1.5 Interest expense (0.8) (0.8) Income tax expense (43.9) (43.9) Profit/(loss) after tax from continuing operations 94.6 94.6 Total comprehensive income/(expense) 94.6 94.6 1. The current assets include cash and cash equivalents Antofagasta plc Annual Report 2022214 214 Antofagasta Annual Report 2022 | Tethyan | | Minera | | | | --- | --- | --- | --- | --- | | Copper | | Zaldívar | | Total | | | 2021 | 2021 | | 2021 | | | $m | | $m | $m | Cash and cash equivalents 3.6 46.4 50.0 1 Current assets 3.6 664.0 667.6 Non-current assets – 1,675.1 1,675.1 Current financial liabilities (excluding trade, other payables and provisions) – (54.3) (54.3) Current liabilities (5.1) (170.2) (175.3) Non-current financial liabilities (excluding trade, other payables and provisions) – (124.4) (124.4) Non-current liabilities (0.1) (155.1) (155.2) Revenue – 849.2 849.2 Depreciation and amortisation (3.0) (160.4) (163.4) Interest income 2.0 0.3 2.3 Interest expense – (0.5) (0.5) Income tax expense – (62.1) (62.1) Loss/(profit) after tax from continuing operations (18.0) 137.1 119.1 Total comprehensive (expense)/income (18.0) 137.1 119.1 1. The current assets include cash and cash equivalents The above summarised financial information is based on the amounts included in the IFRS financial statements of the associate or joint venture (100% of the results or balances of the associate or joint venture, rather than the Group’s proportionate share), after the Group’s fair value adjustments and applying the Group’s accounting policies . ### 19 Equity investments 2022 2021 $m $m Balance at the beginning of the year 8.7 11.1 Acquisition 66.5 – Movement in fair value 15.8 (2.1) Foreign currency exchange differences (0.5) (0.3) Balance at the end of the year 90.5 8.7 Equity investments represent those investments which are not subsidiaries, associates or joint ventures and are not held for trading purposes. The fair value of all equity investments are based on quoted market prices. ### 20 Inventories 2022 2021 $m $m Current Raw materials and consumables 221.4 155.6 Work-in-progress 404.9 316.5 Finished goods 81.8 60.7 708.1 532.8 Non-current Work-in-progress 347.0 270.4 Total 1,055.1 803.2 During 2022, no net realisable value (“NRV”) adjustment has been recognised (2021 – nil). Non-current work-in-progress represents inventory expected to be processed more than 12 months after the balance sheet date. Antofagasta plc Annual Report 2022 215 antofagasta.co.uk 215 Financial Statements / Notes to the Financial statements continued ### 21 Trade and other receivables Trade and other receivables do not generally carry any interest, are principally short term in nature and are normally stated at their nominal value less any impairment. Due in one year Due after one year Total | | 2022 | 2021 | 2022 | | 2021 | 2022 | 2021 | | --- | --- | --- | --- | --- | --- | --- | --- | | | $m | $m | | $m | $m | $m | $m | | Trade receivables 997.1 1,040.0 | | | | – – | | 997.1 1,040.0 | | 1 Other receivables 1,090.1 106.1 51.0 51.2 1,141.1 157.3 2,087.2 1,146.1 51.0 51.2 2,138.2 1,197.3 1. At 31 December 2022, the Other receivables balance includes the proceeds receivable in respect of the Group’s disposal of its investment in the Tethyan joint venture. As detailed in Note 17, the proceeds are currently held by Atacama in a segregated interest-bearing account with an A+ rated bank. The largest balances of trade receivables are with equity participants in the key mining projects. Many other significant trade receivables are secured by letters of credit or other forms of security. There is no material element which is interest-bearing, other than the Tethyan receivable noted above. Trade receivables include mark-to-market adjustments in respect of provisionally priced sales of copper and molybdenum concentrates which remain open as to final pricing. Further details of such adjustments are given in Note 7. Other receivables include employee loans of $49.3 million (31 December 2021 – $42.9 million). Movements in the expected credit loss provision were as follows: | | 2022 | 2021 | | --- | --- | --- | | | $m | $m | | Balance at the beginning of the year (1.2) | | (1.5) | | Utilised in year 0.2 | | 0.1 | | Foreign currency exchange difference – | | 0.2 | | Balance at the end of the year (1.0) | | (1.2) | The ageing analysis of the trade and other receivables balance is as follows: 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 | 2022 2,098.8 36.8 1.2 2.4 2,139.2 (1.0) 2,138.2 2021 1,187.1 8.4 0.3 2.7 1,198.5 (1.2) 1,197.3 With respect to the trade receivables that are neither past due nor impaired, there are no indications that the debtors will not meet their payment obligations. The carrying value of the trade receivables recorded in the financial statements represents the Group’s maximum exposure to credit risk. Antofagasta plc Annual Report 2022216 216 Antofagasta Annual Report 2022 ## 22 Cash and cash equivalents, and liquid investments The fair value of cash and cash equivalents, and liquid investments is not materially different from the carrying values presented. The credit risk on cash and cash equivalents is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies. Cash and cash equivalents, and liquid investments comprised: | | 2022 $m | 2021 $m | | --- | --- | --- | | Cash and cash equivalents | 810.4 | 743.4 | | Liquid investments | 1,580.8 | 2,969.7 | | | **2,391.2** | **3,713.1** | At 31 December 2022 and 2021 there is no cash which is subject to restriction. The denomination of cash, cash equivalents and liquid investments was as follows: | | 2022 $m | 2021 $m | | --- | --- | --- | | US dollars | 2,371.1 | 3,673.8 | | Chilean pesos | 18.8 | 37.8 | | Sterling | 1.0 | 1.2 | | Other | 0.3 | 0.3 | | | **2,391.2** | **3,713.1** | The credit quality of cash, cash equivalents and liquid investments are as follow: | | 2022 $m | 2021 $m | | --- | --- | --- | | AAA | 1,476.7 | 1,772.4 | | AA+ | – | 2.2 | | AA | – | 54.4 | | AA- | 36.5 | 121.1 | | A+ | 303.0 | 799.5 | | A | 484.1 | 904.0 | | Subtotal | **2,300.3** | **3,653.6** | | Cash at bank^{1} | 90.9 | 59.5 | | Total cash, cash equivalents and liquid investments | **2,391.2** | **3,713.1** | 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 2022 (31 December 2021 – nil). Antofagasta plc Annual Report 2022 217 Financial Statements / Notes to the Financial statements continued ### 23 Borrowings and other financial liabilities A) Analysis by type of borrowing and other financial liabilities Borrowings and other financial liabilities may be analysed by business segment and type as follows: 2022 2021 Note $m $m Los Pelambres • Senior loan (i) (1,470.5) (1,188.3) • Leases (55.3) (54.8) Centinela • Senior loan (ii) (276.7) (386.8) • Leases (35.2) (59.8) Antucoya | • Senior loan | (iii) (223.5) (196.3) | | | --- | --- | --- | | • Subordinated debt | (iv) (171.5) (184.5) | | | • Short-term loan | | – (35.0) | | • Leases | (v) (16.5) (23.4) | | Corporate and other items | • Senior loan | (vi) – (497.3) | | --- | --- | | • Bond | (vii) (985.3) (496.1) | | • Leases | (viii) (23.1) (20.4) | Transport division • Senior loan (ix) (15.3) (25.8) • Leases (1.6) (1.4) Preference shares (ix) (2.5) (2.7) Total (3,277.0) (3,172.6) (i) The senior loan at Los Pelambres represents a $1,491 million US dollar denominated syndicated loan divided in three tranches. The first tranche has a remaining duration of 3 years and an interest rate of US LIBOR six-month rate plus 1.05%. The second tranche has a remaining duration of 6 years and an interest rate of US LIBOR six-month rate plus 0.85%. The third tranche has a remaining duration of 5.5 years and an interest rate of US LIBOR six-month rate plus 1.10%. The loans are subject to financial covenants which require that specified net debt to EBITDA and EBITDA to finance expense ratios are maintained. (ii) The senior loan at Centinela represents a US dollar denominated syndicated loan with an amount outstanding of $278 million with a duration of 3 years and an interest rate of US LIBOR six-month rate plus 0.95%. The loan is subject to financial covenants which require that specified net debt to EBITDA and EBITDA to finance expense ratios are maintained. (iii) The senior loan at Antucoya represents a US dollar denominated syndicated loan with an amount outstanding of $225 million. This loan has a remaining duration of 4 years and has an interest rate of Term SOFR six-month rate plus 1.40%. The loan is subject to financial covenants which require that specified net debt to EBITDA and EBITDA to finance expense ratios are maintained. (iv) The subordinated debt at Antucoya is US dollar denominated, provided to Antucoya by Marubeni Corporate with a remaining duration of 4 years and an interest rate of US LIBOR six-month rate plus 3.65%. Subordinated debt provided by Group companies to Antucoya has been eliminated on consolidation. (v) The finance leases at Antucoya are denominated in US dollars with an average interest rate of US LIBOR six-month rate plus 2.0% and a remaining duration of 1.5 years. (vi) During the year ended 31 December 2022, Antofagasta plc made a $500 million repayment of the senior loan. (vii) The bonds at Corporate reflect two corporate bonds – a $500 million 2.375% corporate bond due in 2030 and a $500 million 5.625% corporate bond due in 2032. (viii) Finance leases at Corporate and other items are denominated in Unidades de Fomento (ie inflation-linked Chilean pesos) and have a remaining duration of 4 years and are at fixed rates with an average interest rate of 5.2%. (ix) The long-term loans at the Transport division are US dollar denominated, with an outstanding amount of $15 million and a remaining duration of 1 year and an interest rate of US LIBOR six-month rate plus 1.06%. (x) The preference shares are Sterling-denominated and issued by Antofagasta plc. There are 2 million shares of £1 each authorised, issued and fully paid. The preference shares are non-redeemable and are entitled to a fixed cumulative dividend of 5% per annum. On winding up they 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 in any general meeting of the Company. Antofagasta plc Annual Report 2022218 218 Antofagasta Annual Report 2022 C) Analysis of borrowings and other financial liabilities by currency The exposure of the Group’s borrowings to currency risk is as follows: | | Chilean | | | | | | 2022 | | --- | --- | --- | --- | --- | --- | --- | --- | | | pesos | | Sterling | | US dollars | | Total | | At 31 December 2022 | | $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) | | Chilean | | | | | | 2021 | | --- | --- | --- | --- | --- | --- | --- | --- | | | pesos | | Sterling | | US dollars | | Total | | At 31 December 2021 | | $m | | $m | | $m | $m | | Corporate loans | | - - (2,294.5) (2,294.5) | | | | | | | Bond | | - - (496.1) (496.1) | | | | | | | Other loans (including short-term loans) | | - - (219.5) (219.5) | | | | | | | Leases | (113.5) (4.3) (42.0) (159.8) | | | | | | | | Preference shares | | - (2.7) - (2.7) | | | | | | (113.5) (7.0) (3,052.1) (3,172.6) D) Analysis of borrowings and other financial liabilities by type of interest rate The exposure of the Group’s borrowings to interest rate risk is as follows: 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) 2021 Fixed Floating Total At 31 December 2021 $m $m $m Corporate loans – (2,294.5) (2,294.5) Bond (496.1) – (496.1) Other loans (including short-term loans) – (219.5) (219.5) Leases (143.9) (15.9) (159.8) Preference shares (2.7) – (2.7) (642.7) (2,529.9) (3,172.6) Antofagasta plc Annual Report 2022 219 B) Leases Information in respect of the Group’s leases is contained in the following notes: • Note 15 – depreciation charges, additions and disposals in respect of the right of use assets relating to the leases • Note 32 B) – repayments of the lease balances and new lease liabilities arising during the period • Note 10 – interest expense in respect of the lease balances • Note 10 – cash paid relating to interest on lease antofagasta.co.uk 219 Financial Statements / Notes to the Financial statements continued ### 23 Borrowings and other financial liabilities continued E) Maturity profile The maturity profile of the Group’s borrowings is as follows: | | Within | Between | | Between | | After | 2022 | | --- | --- | --- | --- | --- | --- | --- | --- | | | 1 year | 1-2 years | | 2-5 years | | 5 years | Total | | At 31 December 2022 | $m | | $m | | $m | $m | $m | Corporate loans (377.4) (531.7) (927.7) (149.2) (1986.0) 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) | | Within | Between | | Between | | After | 2021 | | --- | --- | --- | --- | --- | --- | --- | --- | | | 1 year | 1-2 years | | 2-5 years | | 5 years | Total | | At 31 December 2021 | $m | | $m | | $m | $m | $m | Corporate loans (233.0) (367.0) (1,526.7) (167.8) (2,294.5) Bond – – – (496.1) (496.1) Other loans (35.0) – (184.5) – (219.5) Leases (69.9) (38.2) (51.7) – (159.8) Preference shares – – – (2.7) (2.7) (337.9) (405.2) (1,762.9) (666.6) (3,172.6) The amounts included above for leases are based on the present value of minimum lease payments. The total minimum lease payments for these leases may be analysed as follows: | | 2022 | 2021 | | | --- | --- | --- | --- | | | $m | $m | | | Within 1 year (62.1) | | (74.7) | | | Between 1 – 2 years (40.1) | | (40.5) | | | Between 2 – 5 years (37.6) | | (54.8) | | | After 5 years (1.3) | | | - | | Total minimum lease payments (141.1) | | (170.0) | | | Less amounts representing finance charges 9.4 | | 10.2 | | | Present value of minimum lease payments (131.7) | | (159.8) | | All leases are on a fixed payment basis and no arrangements have been entered into for contingent rental payments. F) Financing Facilities On 30 December, 2022, Antofagasta plc agreed a revolving credit facility “RCF” of $500 million. This revolving credit facility has a term of three years, which expires on 30 December, 2025. The facility remained undrawn throughout 2022. Facility available Drawn Undrawn 2022 2021 2022 2021 2022 2021 $m $m $m $m $m $m Revolving credit facility (500.0) – – – (500.0) – (500.0) – – – (500.0) – ### 24 Trade and other payables Due in one year Due after one year Total | | 2022 | 2021 | 2022 | | 2021 | | 2022 | 2021 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | $m | $m | | $m | $m | | $m | $m | | Trade creditors (751.5) | | (579.5) | | – – | | (751.5) | | (579.5) | | Other creditors and accruals (328.2) | | (249.6) | (8.0) | | (16.8) | (336.2) | | (266.4) | | (1,079.7) | | (829.1) | (8.0) | | (16.8) | (1,087.7) | | (845.9) | Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. Other creditors are mainly related to property plant and equipment payables, finance interest and employee retentions. The average credit period taken for trade purchases is 18 days (2021 – 20 days). Antofagasta plc Annual Report 2022220 220 Antofagasta Annual Report 2022 ## 25 Financial instruments and financial risk management ### A) Categories of financial instruments The carrying value of financial assets and financial liabilities is shown below: | | At fair value through profit and loss | At fair value through other comprehensive income | Held at amortised cost | 2022 $m Total | | --- | --- | --- | --- | --- | | **Financial assets** | | | | | | Equity investments | – | 90.5 | – | 90.5 | | Trade and other receivables | 897.2 | – | 1,047.5 | 1,944.7 | | Cash and cash equivalents | 8.5 | – | 801.9 | 810.4 | | Liquid investments | 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)** | | | At fair value through profit and loss | At fair value through other comprehensive income | Held at amortised cost | 2021 $m Total | | --- | --- | --- | --- | --- | | **Financial assets** | | | | | | Equity investments | – | 8.7 | – | 8.7 | | Trade and other receivables | 1,011.7 | – | 83.3 | 1,095.0 | | Cash and cash equivalents | – | – | 743.4 | 743.4 | | Liquid investments | 2,969.7 | – | – | 2,969.7 | | | **3,981.4** | **8.7** | **826.7** | **4,816.8** | | **Financial liabilities** | | | | | | Trade and other payables | – | – | (835.6) | (835.6) | | Borrowings and leases | – | – | (3,172.6) | (3,172.6) | | | **–** | **–** | **(4,008.2)** | **(4,008.2)** | The fair value of the fixed rate bonds included within the "Borrowings and leases" category was $899.4 million at 31 December 2022 compared with its carrying value of $985.3 million. The fair value of all other financial assets and financial liabilities carried at amortised cost approximates the carrying value presented above. The Group has the following financial instruments: | | 2022 $m | 2021 $m | | --- | --- | --- | | **Financial assets** | | | | Trade and other receivables (non-current) per balance sheet | 51.0 | 51.2 | | Trade and other receivables (current) per balance sheet | 2,087.2 | 1,146.1 | | Total trade and other receivables per balance sheet | **2,138.2** | **1,197.3** | | Less: non-financial assets (including prepayments and VAT receivables) | (193.5) | (102.3) | | Total trade and other receivables (financial assets) | **1,944.7** | **1,095.0** | | **Financial liabilities** | | | | Trade and other payables (current) per balance sheet | (1,079.7) | (829.1) | | Trade and other payables (non-current) per balance sheet | (8.0) | (16.8) | | Total trade and other payables per balance sheet | **(1,087.7)** | **(845.9)** | | Less: non-financial liabilities (including VAT payables) | 20.4 | 10.3 | | Total trade and other payables (financial liabilities) | **(1,067.3)** | **(835.6)** | Antofagasta plc Annual Report 2022 221 Financial Statements / Notes to the Financial statements continued ## 25 Financial instruments and financial risk management continued ### B) Fair value of financial instruments An analysis of financial assets and financial liabilities measured at fair value is presented below: | | Level 1 $m | Level 2 $m | Level 3 $m | Total 2022 $m | | --- | --- | --- | --- | --- | | **Financial assets** | | | | | | Equity investments (a) | 90.5 | – | – | 90.5 | | Trade and other receivables (b) | – | 897.2 | – | 897.2 | | Cash and cash equivalents (c) | 8.5 | – | – | 8.5 | | Liquid investment (d) | – | 1,580.8 | – | 1,580.8 | | | **99.0** | **2,478.0** | **–** | **2,577.0** | | **Financial assets** | | | | | | Equity investments (a) | 8.7 | – | – | 8.7 | | Trade and other receivables (b) | – | 1,011.7 | – | 1,011.7 | | Liquid investment (d) | – | 2,969.7 | – | 2,969.7 | | | **8.7** | **3,981.4** | **–** | **3,990.1** | Recurring fair value measurements are those that are required in the balance sheet at the end of each reporting year. a) Equity investments are investments in shares on active markets and are valued using unadjusted quoted market values of the shares at the financial reporting date. These are level 1 inputs as described below. b) Provisionally priced metal sales for the period are marked-to-market at the end of the period. Gains and losses from the marking-to-market of open sales are recognised through adjustments to revenue in the income statement and trade receivables in the balance sheet. Forward prices at the end of the period are used for copper sales while period-end average prices are used for molybdenum concentrate sales. These are level 2 inputs as described below. c) The element of cash and cash equivalents measured at fair value relates to money market funds, which are valued reflecting market prices at the period end. These are level 1 inputs as described below. d) Liquid investments are highly liquid current asset investments that are valued reflecting market prices at the period end. These are level 2 inputs as described below. The inputs to the valuation techniques described above are categorised into three levels, giving the highest priority to unadjusted quoted prices in active markets (level 1) and the lowest priority to unobservable inputs (level 3 inputs): - Level 1 fair value measurement inputs are unadjusted quoted prices in active markets for identical assets or liabilities. - Level 2 fair value measurement inputs are derived from inputs other than quoted market prices included in level 1 that are observable for the asset or liability, either directly or indirectly. - Level 3 fair value measurement inputs are unobservable inputs for the asset or liability. The degree to which inputs into the valuation techniques used to measure the financial assets and liabilities are observable and the significance of these inputs in the valuation are considered in determining whether any transfers between levels have occurred. In the year ended 31 December 2022, there were no transfers between levels in the hierarchy. ### C) Financial risk management The Group's activities expose it to a variety of financial risks: market risk (including commodity price risk, currency risk, interest rate risk and other price risk), credit risk and liquidity risk. 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. The Board of Directors is responsible for overseeing the Group's risk management framework. The Audit and Risk Committee assists the Board with its review of the effectiveness of the risk management process, and monitoring of key risks and mitigations. The Internal Audit department undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit and Risk Committee. #### (1) Commodity price risk The Group generally sells its copper and molybdenum concentrate and copper cathode output at prevailing market prices, subject to final pricing adjustments which normally range from one to four months after delivery to the customer, and it is therefore exposed to changes in market prices for copper and molybdenum both in respect of future sales and previous sales, which remain open as to final pricing. In 2022, sales of copper and molybdenum concentrate and copper cathodes represented 90.4% of Group revenue and therefore revenues and earnings depend significantly on LME and realised copper prices. The Group periodically uses futures and min-max options to manage its exposure to copper prices. These instruments may give rise to accounting volatility due to fluctuations in their fair value prior to the maturity of the instruments. Details of those copper and molybdenum concentrate sales and copper cathode sales, which remain open as to final pricing, are given in Note 7. #### Commodity price sensitivity The sensitivity analysis below shows the impact of a movement in the copper price on the financial instruments held as at the reporting date. A movement in the copper market price as at the reporting date will affect the final pricing adjustment to sales that remain open at that date, impacting the trade receivables balance and consequently the income statement. A movement in the copper market price will also affect the valuation of 222 Antofagasta plc Annual Report 2022 commodity derivatives, impacting the hedging reserve in equity if the fair value movement relates to an effective designated cash flow hedge, and impacting the income statement if it does not. The calculation assumes that all other variables, such as currency rates, remain constant. - If the copper market price as at the reporting date had increased by 10 c/lb, profit attributable to the owners of the parent would have increased by $19.8 million (2021 – increase by $18.4 million). - If the copper market price as at the reporting date had decreased by 10 c/lb, profit attributable to the owners of the parent would have decreased by $19.8 million (2021 – decrease by $18.4 million). In addition, a movement in the average copper price during the year would impact revenue and earnings. A 10 c/lb change in the average copper price during the year would have affected profit attributable to the owners of the parent by $58.7 million (2021 – $64.8 million) and earnings per share by 6.0 cents (2021 – 6.6 cents), based on production volumes in 2022, without taking into account the effects of provisional pricing. A $1/lb change in the average molybdenum price for the year would have affected profit attributable to the owners of the parent by $9.5 million (2021 – $9.2 million), and earnings per share by 1.0 cents (2021 – 0.9 cents), based on production volumes in 2022, and without taking into account the effects of provisional pricing. A $100/oz change in the average gold price for the year would have affected profit attributable to the owners of the parent by $11.6 million (2021 – $11.5 million), and earnings per share by 1.2 cents (2021 – 1.2 cents), based on production volumes in 2022, and without taking into account the effects of provisional pricing. ### (II) Currency risk The Group is exposed to a variety of currencies. The US dollar, however, is the currency in which the majority of the Group's sales are denominated. Operating costs are influenced by the countries in which the Group's operations are based (principally in Chile) as well as those currencies in which the costs of imported goods and services are determined. After the US dollar, the Chilean peso is the most important currency influencing costs and to a lesser extent sales. Given the significance of the US dollar to the Group's operations, this is the presentational currency of the Group for internal and external reporting. The US dollar is also the currency for borrowing and holding surplus cash, although a portion of this may be held in other currencies, notably Chilean pesos and Sterling, to meet short-term operating and capital commitments and dividend payments. When considered appropriate, the Group uses forward exchange contracts and currency swaps to limit the effects of movements in exchange rates in foreign currency denominated assets and liabilities. The Group may also use these instruments to reduce currency exposure on future transactions and cash flows. Details of any exchange rate derivatives entered by the Group in the year are given in Note 25(D). The currency exposure of the Group's cash, cash equivalents and liquid investments is given in Note 22, and the currency exposure of the Group's borrowings is given in Note 23(C). The effects of exchange gains and losses included in the income statement are given in Note 10. Exchange differences on translation of the net assets of entities with a functional currency other than the US dollar are taken to the currency translation reserve and are disclosed in the Consolidated Statement of Changes in Equity on page 182. ### Currency sensitivity The sensitivity analysis below shows the impact of a movement in the US dollar/Chilean peso exchange rate on the financial instruments held as at the reporting date. The impact on profit or loss is as a result of the retranslation of monetary financial instruments (including cash, cash equivalents, liquid investments, trade receivables, trade payables and borrowings). The impact on equity is as a result of changes in the fair value of derivative instruments which are effective designated cash flow hedges, and changes in the fair value of equity investments. The calculation assumes that all other variables, such as interest rates, remain constant. If the US dollar had strengthened by 10% against the Chilean peso as at the reporting date, profit attributable to the owners of the parent would have increased by $19.1 million (2021 – increase of $6.1 million). If the US dollar had weakened by 10% against the Chilean peso as at the reporting date, profit attributable to the owners of the parent would have decreased by $23.3 million (2021 – decrease of $7.4 million). ### (III) Interest rate risk The Group's policy is generally to borrow and invest cash at floating rates. Fluctuations in interest rates may impact the Group's net finance income or cost, and to a lesser extent the value of financial assets and liabilities. The Group occasionally uses interest rate swaps and collars to manage interest rate exposures on a portion of its existing borrowings. Details of any interest rate derivatives entered into by the Group are given in Note 23(D). The Interest rate exposure of the Group's borrowings is given in Note 23. ### Interest rate sensitivity The sensitivity analysis below shows the impact of a movement in interest rates in relation to the financial instruments held as at the reporting date. The impact on profit or loss reflects the impact on annual interest expense in respect of the floating rate borrowings held as at the reporting date, and the impact on annual interest income in respect of cash and cash equivalents held as at the reporting date. The impact on equity is as a result of changes in the fair value of derivative instruments which are effective designated cash flow hedges. The calculation assumes that all other variables, such as currency rates, remain constant. If the interest rate increased by 1%, based on the financial instruments held as at the reporting date, profit attributable to the owners of the parent would have decreased by $3.3 million (2021 – decrease of $6.4 million). This does not include the effect on the income statement of changes in the fair value of the Group's liquid investments relating to the underlying investments in fixed income instruments. ### (IV) Other price risk The Group is exposed to equity price risk on its equity investments. ### Equity price sensitivity The sensitivity analysis below shows the impact of a movement in the equity values of the equity investment financial assets held as at the reporting date. If the value of the equity investments had increased by 10% as at the reporting date, equity would have increased by $9.1 million (2021 – increase of $0.9 million). There would have been no impact on the income statement. Antofagasta plc Annual Report 2022 223 Financial Statements / Notes to the Financial statements continued ### 25 Financial instruments and financial risk management continued (V) Cash flow risk The Group’s future cash flows depend on a number of factors, including commodity prices, production and sales levels, operating costs, capital expenditure levels, and financial income and costs. Its cash flows are therefore subject to the exchange, interest rate and commodity price risks described above as well as operating factors and input costs. To reduce the risk of potential short-term disruptions to the supply of key inputs such as electricity and sulphuric acid, the Group enters into medium and long-term supply contracts to help ensure continuity of supply. Long-term electricity supply contracts are in place at each of the Group’s mines, in most cases linking the cost of electricity under the contract to the current cost of electricity on the Chilean grid or the generation cost of the supplier. The Group seeks to lock in supply of sulphuric acid for future periods of a year or longer, with contract prices agreed in the latter part of the year, to be applied to purchases of acid in the following year. Further information on production and sales levels and operating costs are given in the Operating review on pages 76 to 93. (VI) Credit risk Credit risk arises from trade and other receivables, cash, cash equivalents, liquid investments and derivative financial instruments. The Group’s credit risk is primarily to trade receivables. The credit risk on cash, cash equivalents and liquid investments and on derivative financial instruments is limited as the counterparties are financial institutions with high credit ratings assigned by international credit agencies. The largest balances of trade receivables are with equity participants in the key mining projects. Many other significant trade receivables are secured by letters of credit or other forms of security. All customers are subject to credit review procedures, including the use of external credit ratings where available. Credit is provided only within set limits, which are regularly reviewed. The main customers are recurrent with a good credit history during the years they have been customers. Outstanding receivable balances are monitored on an ongoing basis. The carrying value of financial assets recorded in the financial statements represents the maximum exposure to credit risk. The amounts presented in the balance sheet are net of allowances for any doubtful receivables (Note 21). The Group has recognised an expected credit loss provision for its employee receivables, with the main inputs into the provision calculation being the average level of staff turnover and the average level of recovery of receivables from former employees. For the reasons set out above, the expected credit loss risk for other trade and other receivable balances is considered to be immaterial to the Group. (VII) Liquidity risk The Group manages liquidity risk by maintaining adequate cash reserves and financing facilities, through the review of forecast and actual cash flows. The Group typically holds surplus cash in demand or term deposits or highly liquid investments, which typically can be accessed or liquidated within 24 hours. At the end of 2022, the Group was in a net debt position (2021 – net cash position), as disclosed in Note 32(C). Details of cash, cash equivalents and liquid investments are given in Note 22, while details of borrowings including the maturity profile are given in Note 23(E). Details of undrawn committed borrowing facilities are also given in Note 23. The following table analyses the maturity of the Group’s contractual commitments in respect of its financial liabilities and derivative financial instruments. The table has been drawn up based on the undiscounted cash flows on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows. | | Less than | | Between | | Between | | After | 2022 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 1 year | 1-2 years | | 2-5 years | | 5 years | Total | | At 31 December 2022 | | $m | | $m | | $m | $m | $m | Corporate loans (475.7) (609.4) (1,017.8) (163.3) (2,266.2) Other loans (including short-term loans and bond) (60.5) (40.0) (290.8) (1,176.3) (1,567.6) Leases (62.1) (40.4) (37.9) (1.3) (141.7) Preference shares* (0.1) (0.1) (0.3) (2.5) (3.0) Trade and other payables (1,079.8) (4.0) (3.9) – (1,087.7) (1,678.2) (693.9) (1,350.7) (1,343.4) (5,066.2) | | Less than | | Between | | Between | | After | 2021 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 1 year | 1-2 years | | 2-5 years | | 5 years | Total | | At 31 December 2021 | | $m | | $m | | $m | $m | $m | Corporate loans (267.1) (398.5) (1,574.8) (170.6) (2,411.0) Other loans (including short-term loans and bond) (47.0) (11.9) (242.7) (555.5) (857.1) Leases (74.7) (40.5) (54.5) – (169.7) Preference shares* (0.1) (0.1) (0.3) (2.7) (3.2) Trade and other payables (829.1) (16.8) – – (845.9) (1,218.0) (467.8) (1,872.3) (728.8) (4,286.9) * The preference shares pay an annual dividend of £100,000 in perpetuity, and accordingly it is not possible to determine total amounts payable for periods without a fixed end date. Antofagasta plc Annual Report 2022224 224 Antofagasta Annual Report 2022 #### (VIII) Capital risk management The Group's objectives are to return capital to shareholders while leaving the Group with sufficient funds to progress its short, medium and long-term growth plans as well as preserving the financial flexibility to take advantage of opportunities as they may arise. This policy remains unchanged. The Group monitors capital on the basis of net cash/debt (defined as cash, cash equivalents and liquid investments less borrowings) which was net debt of $885.8 million at 31 December 2022 (2021 – net cash $540.5 million), as well as gross cash (defined as cash, cash equivalents and liquid investments) which was $2,391.2 million at 31 December 2022 (2021 – $3,713.1 million). The Group's total cash is held in a combination of on demand and term deposits and managed funds investing in high quality, fixed income instruments. The managed funds are held primarily for investment purposes rather than meeting short-term cash commitments and accordingly these amounts are presented as liquid investments; however they are included in net cash for monitoring and decision-making purposes. The Group has a risk averse investment strategy. The Group's borrowings are detailed in Note 23. Additional project finance or shareholder loans are taken out by the operating subsidiaries to fund projects on a case-by-case basis. Under the terms of the major borrowing facilities, the Group is required to comply with the following financial covenants: 1) Net Financial Debt/EBITDA 2) EBITDA/Interest Expense 3) Total Indebtedness/Tangible Net Worth (being the net asset value less any intangible asset value) The Group has complied with these covenants throughout the reporting period. #### D) 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. The Group has applied the hedge accounting provisions of IFRS 9 "Financial Instruments". Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows have been recognised directly in equity, with such amounts subsequently recognised in the income statement in the period when the hedged item affects profit or loss. Any ineffective portion is recognised immediately in the income statement. Realised gains and losses on commodity derivatives recognised in the income statement have been recorded within revenue. The time value element of changes in the fair value of derivative options is recognised within other comprehensive income. Realised gains and losses and changes in the fair value of exchange and interest derivatives are recognised within other finance items for those derivatives where hedge accounting has not been applied. When hedge accounting has been applied, the realised gains and losses on exchange and interest derivatives are recognised within other finance items and interest expense respectively. All derivatives were closed in 2021 and there are none entered into in 2022. ### 26 Long-term incentive plan The long-term incentive plan (the "Plan") forms part of the remuneration of senior managers in the Group. Directors are not eligible to participate in the Plan. #### Details of the Awards Under the Plan, the Group may grant awards based on the price of ordinary shares in the Company and cannot grant awards over actual shares. - Restricted Awards: These awards are conditional rights to receive cash payment by reference to a specified number of the Company's ordinary shares, subject to the relevant employee remaining employed by the Group when the Restricted Award vests, and - Performance Awards: These awards are conditional rights to receive cash payment by reference to a specified number of the Company's ordinary shares subject to both the satisfaction of a performance condition and the relevant employee remaining employed by the Group when the Performance Award vests. When awards vest under the Plan, participants become entitled to receive a cash payment by reference to the number and portion of awards that have vested and the market value of the Company's ordinary shares on the date of vesting. There is no exercise price payable by participants in respect of the awards. Restricted Awards can only vest in full if participants remain employed by the Group for three years from the date that Restricted Awards are granted. In ordinary circumstances, the first one-third of a Restricted Award will vest after one year, the second one-third will vest after two years and the remaining one-third will vest after three years. There are no performance criteria attached to Restricted Awards. The fair value of Restricted Awards granted under the Plan is recorded as a compensation expense over the vesting periods, with a corresponding liability recognised for the fair value of the liability at the end of each period until settled. Performance Awards only vest if certain performance criteria are met. The performance criteria reflect a number of factors including total shareholder return, earnings levels, growth in the Group's reserves and resources and project delivery targets. The fair value of Performance Awards under the Plan is recorded as a compensation expense over the vesting period, with a corresponding liability at the end of each period until settled. Antofagasta plc Annual Report 2022 225 Financial Statements / Notes to the Financial statements continued ### 26 Long-term incentive plan continued Valuation process and accounting for the awards The fair value of the awards is determined using a Monte Carlo simulation model. The inputs into the Monte Carlo simulation model are as follows: 2022 2021 Weighted average forecast share price at vesting date $18.5 $18.0 | Expected volatility 50.90% | 39.23% | | --- | --- | | Expected life of awards 3 years | 3 years | | Expected dividend yields 6.77% | 3.94% | | Discount rate 4.33% | 0.08% | Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous five years. The expected life of awards used in the model has been adjusted based on management’s best estimate for the effects of non-transferability and compliance of the objectives determined according to the characteristic of each plan. The number of awards outstanding at the end of the year is as follows: Restricted Performance Awards Awards Outstanding at 1 January 2022 544,143 1,385,475 Granted during the year 214,812 336,206 Cancelled during the year (38,330) (128,513) Payments during the year (282,106) (416,221) Outstanding at 31 December 2022 438,519 1,176,947 Number of awards that have vested 213,594 – The Group has recorded a liability of $17.2 million at 31 December 2022, of which $4.7 million is due after more than one year (31 December 2022 – $18.9 million of which $9.2 million was due after more than one year) and total expenses of $13.1 million for the year (2021 – expense of $9.0 million). ### 27 Post-employment benefit obligations A) Defined contribution schemes The Group operates defined contribution schemes for a limited number of employees. The amount charged to the income statement in 2022 was $0.1 million (2021 – $0.1 million), representing the amount paid in the year. There were no outstanding amounts which remain payable at the end of either year. B) Severance provisions Employment terms at some of the Group’s operations provide for payment of a severance payment when an employment contract comes to an end. This is typically at the rate of one month for each year of service (subject in most cases to a cap as to the number of qualifying years of service) and based on final salary level. The severance payment obligation is treated as an unfunded defined benefit plan, and the obligation recognised is based on valuations performed by an independent actuary using the projected unit credit method, which are regularly updated. The obligation recognised in the balance sheet represents the present value of the severance payment obligation. Actuarial gains and losses are immediately recognised in other comprehensive income. The most recent valuation was carried out in 2022 by Ernst & Young, a qualified actuary in Santiago, Chile who is not connected with the Group. The main assumptions used to determine the actuarial present value of benefit obligations were as follows: | | 2022 | 2021 | | --- | --- | --- | | | % | % | | Average nominal discount rate 5.3% | | 6.3% | | Average rate of increase in salaries 2.2% | | 2.3% | | Average staff turnover 3.5% | | 4.9% | Amounts included in the income statement in respect of severance provisions are as follows: | | 2022 | 2021 | | --- | --- | --- | | | $m | $m | | Current service cost (charge to operating profit) (19.1) | | (19.8) | | Interest cost (charge to other finance items) (6.8) | | (3.6) | Foreign exchange credit/(charge) to other finance items 1.5 19.6 Total charge to income statement (24.4) (3.8) Antofagasta plc Annual Report 2022226 226 Antofagasta Annual Report 2022 Movements in the present value of severance provisions were as follows: | | 2022 | | 2021 | | --- | --- | --- | --- | | | $m | | $m | | Balance at the beginning of the year (107.5) | | (123.2) | | | Current service cost (19.1) | | (19.8) | | | Actuarial (losses)/gains (18.1) | | | 3.1 | | Unwinding of discount on provisions (6.8) | | | (3.6) | | Paid in the year 12.7 | | | 16.4 | | Foreign currency exchange difference 1.5 | | | 19.6 | | Balance at the end of the year (137.3) | | (107.5) | | Assumptions description Discount rate 31 December 2022 31 December 2021 Nominal discount rate 5.34% 6.50% 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 28 November 2022 31 October 2021 Source of the reference interest rate Bloomberg Bloomberg The discount rate is the interest rate used to discount the estimated future severance payments to their present value. The table above shows the principal instruments and assumptions utilised in determining the discount rate. Rate of increase in salaries This represents the estimated average rates of future salary increases, reflecting likely future promotions and other changes. This has been based on historical information for the Group for the period from 2018 to 2022. Turnover rate This represents the estimated average level of future employee turnover. This has been based on historical information for the Group for the period from 2018 to 2022. Sensitivity analysis Significant actuarial assumptions for the determination of the defined obligation are discount rate, expected salary increase and staff turnover. The sensitivity analysis below has been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant. • If the discount rate is 100 basis points higher, the defined benefit obligation would decrease by $10.2 million. If the discount rate is 100 basis points lower, the defined benefit obligation would increase by $11.7 million. • If the expected salary growth increases by 1%, the defined benefit obligation would increase by $10.5 million. If the expected salary growth decreases by 1%, the defined benefit obligation would decrease by $9.6 million. • If the staff turnover increases by 1%, the defined benefit obligation would decrease by $2.5 million. If the staff turnover decreases by 1%, the defined benefit obligation would increase by $2.5 million. Antofagasta plc Annual Report 2022 227 antofagasta.co.uk 227 Financial Statements / Notes to the Financial statements *continued* ## 28 Deferred tax assets and liabilities | | Accelerated capital allowances $m | Temporary differences on provisions $m | Withholding tax $m | Short-term differences $m | Mining tax (Royalty) $m | Tax losses $m | Disposal $m | Total $m | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | **At 1 January 2021** | (1,122.1) | 124.6 | (52.8) | 42.0 | (103.5) | 5.3 | 0.1 | (1,106.4) | | (Charge)/credit to income | (248.9) | (7.5) | 29.7 | (103.3) | 1.0 | 31.7 | (0.1) | (297.4) | | Exceptional items | – | – | – | – | – | 90.6 | – | 90.6 | | Charge deferred in equity | – | (2.1) | – | – | (0.4) | – | – | (2.5) | | **At 31 December 2021 and 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 | – | – | – | – | | Charge deferred in equity | – | 4.9 | – | – | 0.8 | – | – | 5.7 | | **At 31 December 2022** | **(1,467.1)** | **129.1** | **(71.6)** | **(67.8)** | **(111.9)** | **124.5** | **–** | **(1,464.8)** | The charge to the income statement of $154.8 million (2021 – $206.8 million) included an impact from foreign exchange differences of nil (2021 – nil). Certain deferred tax assets and liabilities have been offset. Deferred tax assets and liabilities are offset where there is a legally enforceable right to do so, which under Chilean tax regulations is only possible within individual legal entities. The following is the analysis of the deferred tax balance (after offset): | | 2022 $m | 2021 $m | | --- | --- | --- | | Net deferred tax assets | 78.5 | 96.8 | | Net deferred tax liabilities | (1,543.3) | (1,412.5) | | Net deferred tax balances | (1,464.8) | (1,315.7) | At 31 December 2022, the Group had unused tax losses associated with Chilean entities (predominantly Antucoya) of $460.3 million (2021 – $472.5 million) available for offset against future profits. Generally under Chilean tax law most tax losses can be carried forward indefinitely. A deferred tax asset of $124.5 million has been recognised in respect of 100% of these losses as at 31 December 2022 (31 December 2021 – $127.6 million). In addition, at 31 December 2022, the Group had unused tax losses associated with entities outside of Chile (predominantly in respect of the Twin Metals project) of $427.0 million (2021 – $428.0 million). A portion of the Twin Metals tax losses expire in the period from 2030 – 2037, and the remainder can be carried forward indefinitely. Deferred tax assets have not been recognised in respect of these tax losses, reflecting the fact that the relevant entities have generated taxable losses in recent years. At 31 December 2021, the Group recognised $90.6 million of previously unrecognised deferred tax assets relating to tax losses available for offset against future profits, reflecting the improved actual and forecast profitability of the relevant Group entity (Antucoya). That entity has continued to generate taxable profits during 2022, utilising $10.9 million of the deferred tax asset during the year. At 31 December 2022, deferred withholding tax liabilities of $71.6 million have been recognised (31 December 2021 – $23.1 million) which relate to undistributed earnings of subsidiaries where it is considered likely that the corresponding profits will be distributed in the foreseeable future. The value of the remaining undistributed earnings of subsidiaries, for which deferred tax liabilities have not been recognised, because the Group is in a position to control the timing of the distributions and it is likely that distributions will not be made in the foreseeable future, was $6,430.4 million (31 December 2021 – $6,483.3 million). If deferred withholding tax liabilities were recognised in respect of all of these remaining undistributed earnings of subsidiaries this would result in an additional deferred tax liability and expense of approximately $1,076.5 million (31 December 2021 – $1,232.1 million), depending on the application of tax credits which may be available in particular circumstances. Temporary differences arising in connection with interests in associates are insignificant. The deferred tax balance of $1,464.8 million (2021 – $1,315.7 million) includes $1,404.7 million (2021 – $1,272.6 million) due in more than one year. All amounts are shown as non-current on the face of the balance sheet as required by IAS 12 Income Taxes. 228 Antofagasta plc Annual Report 2022 ### 29 Decommissioning and restoration provisions 2022 2021 $m $m Balance at the beginning of the year (336.1) (520.2) Charge to operating profit in the year (15.4) (11.3) Unwind of discount to net interest in the year (10.1) (2.6) Adjustment to provision discount rates (1.6) 30.8 Capitalised adjustment to provision (173.8) 119.9 Utilised in year 49.7 33.8 Foreign currency exchange difference (0.9) 13.5 Balance at the end of the year (488.2) (336.1) Short-term provisions (33.2) (33.8) Long-term provisions (455.0) (302.3) Total (488.2) (336.1) Decommissioning and restoration costs relate to the Group’s mining operations. Costs are estimated on the basis of a formal closure plan and are subject to regular independent formal review by Sernageomin, the Chilean government agency which regulates the mining industry in Chile. During 2022, the Centinela and Antucoya provisions were updated to reflect new plans approved by Sernageomin during the year. The provision balance reflects the present value of the forecast future cash flows expected to be incurred in line with the closure plans, discounted using Chilean real interest rates with durations corresponding with the timings of the closure activities. At 31 December 2022, the real discount rates ranged from 1.67% to 1.73% (31 December 2021: 2.3% to 2.5%). It is estimated that the provision will be utilised from 2023 until 2066 based on current mine plans, with approximately 15% of the total provision balance expected to be utilised between 2023 and 2031, approximately 49% between 2032 and 2041, approximately 10% between 2042 and 2051 and approximately 26% between 2052 and 2066. Given the long-term nature of these balances, it is possible that future climate risks could impact the appropriate amount of these provisions, both in terms of the nature of the decommissioning and site rehabilitation activities that are required, or the costs of undertaking those activities. The Group discloses in line with the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”). This process included scenario analyses assessing the impact of transition and physical risks. As a simple high-level sensitivity, we have considered whether the level of estimated costs relating to the potential future risks identified under the scenario analysis could indicate a general level of future cost increases as a consequence of climate risks which could indicate a significant potential impact on these provision balances. This analysis did not indicate a significant potential impact on the decommissioning and restoration provision balances. However, more detailed specific analysis of the potential impacts of climate risks in future periods could result in adjustments to these provision balances. When future updates to the closure plans are prepared and submitted to Sernageomin for review and approval, it is possible that additional consideration of potential climate risk impacts may need to be incorporated into the plan assumptions. In addition, Sernageomin may introduce new regulations or guidance in respect of climate risks which may need to be addressed in future updates to the Group’s closure plans. ### 30 Share capital and other reserves (I) Share capital The ordinary share capital of the Company is as follows: 2022 2021 2022 2021 Number Number $m $m Authorised | Ordinary shares of 5p each 1,300,000,000 1,300,000,000 | | | 118.9 | 118.9 | | --- | --- | --- | --- | --- | | | 2022 | 2021 | 2022 | 2021 | | | Number | Number | $m | $m | Issued and fully paid Ordinary shares of 5p each 985,856,695 985,856,695 89.8 89.8 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. There were no changes in the authorised or issued share capital of the Company in either 2022 or 2021. Details of the Company’s preference share capital, which is included within borrowings in accordance with IAS 32 Financial Instruments, are given in Note 23A(x). Antofagasta plc Annual Report 2022 229 antofagasta.co.uk 229 Financial Statements / Notes to the Financial statements *continued* ## 30 Share capital and other reserves *continued* ### (II) Other reserves and retained earnings Details of the share premium account, hedging, fair value and translation reserves and retained earnings for both 2022 and 2021 are included within the consolidated statement of changes in equity on page 182. | | 2022 $m | 2021 $m | | --- | --- | --- | | **Share premium** | | | | At 1 January and 31 December | 199.2 | 199.2 | | **Hedging reserves^{1}** | | | | At 1 January | – | (23.9) | | Parent and subsidiaries net cash flow hedge fair value losses | – | (100.4) | | Parent and subsidiaries net cash flow hedge losses transferred to the income statement | – | 126.8 | | Tax on the above | – | (2.5) | | At 31 December | – | – | | **Equity investment revaluation reserve^{2}** | | | | At 1 January | (7.4) | (5.3) | | Gains/(losses) on equity investment | 15.8 | (2.1) | | At 31 December | 8.4 | (7.4) | | **Foreign currency translation reserves^{3}** | | | | At 1 January | (3.0) | (1.4) | | Currency translation adjustment | (0.4) | (1.6) | | At 31 December | (3.4) | (3.0) | | **Total other reserves per balance sheet** | **5.0** | **(10.4)** | | **Retained earnings** | | | | At 1 January | 8,071.6 | 7,492.2 | | Parent and subsidiaries' profit for the period | 1,484.9 | 1,230.5 | | Equity accounted units' profit after tax for the period | 48.1 | 59.7 | | Actuarial (losses)/gains ^{4} | (8.2) | – | | **Total comprehensive income for the year** | **1,524.8** | **1,290.2** | | Dividends paid | (1,262.9) | (710.8) | | **At 31 December** | **8,333.5** | **8,071.6** | 1. The hedging reserve records gains or losses on cash flow hedges that are recognised initially in equity (through other comprehensive income), as described in Note 25. 2. The equity investments revaluation reserves record fair value gains or losses relating to equity investments, as described in Note 19. 3. Exchange differences arising on the translation of the Group's net investment in foreign-controlled companies are taken to the foreign currency translation reserve. The cumulative differences relating to an investment are transferred to the income statement when the investment is disposed of. 4. Actuarial gains or losses relating to long-term employee benefits, as described in Note 26. 230 Antofagasta plc Annual Report 2022 ### 31 Non-controlling interests The non-controlling interests of the Group during 2022 and 2021 are as follows: | | Non- | | At | Share of profit | | | | | | | | | At | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | controlling | | 1 January | | | for the | Capital | | Share of | | Hedging and | | 31 December | | | Interest | | | 2022 | financial year | | Increase | | dividends | | actuarial gains | | | 2022 | | | % Country | | $m | | $m | | $m | | $m | | $m | | $m | Los Pelambres 40.0 Chile 1,204.5 320.4 – (80.0) (1.9) 1,443.0 Centinela 30.0 Chile 1,275.9 82.9 – – (2.0) 1,356.8 Antucoya 30.0 Chile 198.4 21.2 – – (0.3) 219.3 Encierro 43.5 Chile – (2.2) – – – (2.2) Total 2,678.8 422.3 – (80.0) (4.2) 3,016.9 Share of | | Non- | | At | profit/(losses) | | | | | Hedging and | | | At | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | controlling | | 1 January | | | for the | Capital | Share of | | actuarial | | 31 December | | | Interest | | | 2021 | financial year | | Increase | dividends | | gains/(losses) | | | 2021 | | | % Country | | $m | | $m | $m | | $m | | $m | | $m | Los Pelambres 40.0 Chile 1,107.3 608.0 – (512.0) 1.2 1,204.5 Centinela 30.0 Chile 1,113.7 252.2 – (92.5) 2.5 1,275.9 Antucoya 30.0 Chile 109.5 84.4 – – 4.5 198.4 Total 2,330.5 944.6 – (604.5) 8.2 2,678.8 The proportion of the voting rights is proportional with the economic interest for each of the companies listed above. Summarised financial position and cash flow information for the years ended 2022 and 2021 is set out below: | 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) | Los Pelambres | | Centinela | | Antucoya | | | --- | --- | --- | --- | --- | --- | | | 2021 | | 2021 | | 2021 | | | $m | | $m | | $m | Non-controlling interest (%) 40.0% 30.0% 30.0% Cash and cash equivalents 14.2 122.7 48.4 Current assets 1,073.3 1,358.0 381.4 Non-current assets 4,593.8 4,561.2 1,354.6 Current liabilities (519.1) (714.5) (183.8) Non-current liabilities (2,123.0) (1,082.6) (364.9) Net cash from operating activities 1,816.8 1,885.5 295.3 Net cash used in investing activities (878.6) (837.6) (49.3) Net cash used in financing activities (1,408.4) (1,152.6) (206.9) Notes to the summarised financial position and cash flow (i) The amounts disclosed for each subsidiary are based on the amounts included in the consolidated financial statements (100% of the results and balances of the subsidiary rather than the non-controlling interest proportionate share) before inter-company eliminations. (ii) Summarised income statement information is shown in the segment information in Note 6. (iii) There are some subsidiaries including Encierro with a non controlling interest portion not included in this note where those portions are not material to the Group. Antofagasta plc Annual Report 2022 231 antofagasta.co.uk 231 Financial Statements / Notes to the Financial statements continued ### 32 Notes to the consolidated cash flow statement A) Reconciliation of profit before tax to cash flow from operations 2022 2021 $m $m Profit before tax 2,558.9 3,477.1 Depreciation 1,141.1 1,078.7 Net loss on disposals 2.1 9.2 Net finance expense/(income) 68.2 (16.0) Net share of results of associates and joint ventures (48.1) (59.7) Gain on disposal of investment in joint venture (944.7) – Provision against carrying value of assets – 177.6 (Increase)/decrease in inventories (180.7) 10.9 Decrease/(increase) in debtors 27.0 (206.8) Increase in creditors 141.0 55.7 Decrease in provisions (26.5) (19.0) Cash flow generated from operations 2,738.3 4,507.7 B) Analysis of changes in net debt 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) Movement | | At | | | | | Amortisation | | | | between | | | | | | At | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 1 January | | | | | | of finance | | Capitalisation | | maturity | | | | | 31 December | | | | 2021 | Cash flow | | New leases | | | costs | of interest | | categories | | Other | Exchange | | | 2021 | | | $m | | $m | | $m | | $m | | $m | | $m | $m | | $m | | $m | Cash and cash equivalents 1,246.8 (483.1) – – – – – (20.3) 743.4 Liquid investments 2,426.0 543.7 – – – – – – 2,969.7 Total cash and cash equivalents and liquid investments 3,672.8 60.6 – – – – – (20.3) 3,713.1 Borrowings due within one year (529.8) 545.6 – – – (294.2) 10.4 – (268.0) Borrowings due after one year (3,013.8) – – (5.7) (16.6) 294.2 – (0.2) (2,742.1) Leases due within one year (73.6) 88.9 – – – (84.4) – – (69.1) Leases due after one year (134.9) – (61.8) – – 84.4 – 21.6 (90.7) Preference shares (2.7) – – – – – – – (2.7) Total borrowings (3,754.8) 634.5 (61.8) (5.7) (16.6) – 10.4 21.4 (3,172.6) Net debt (82.0) 695.1 (61.8) (5.7) (16.6) – 10.4 1.1 540.5 C) Net (debt)/cash 2022 2021 $m $m Cash, cash equivalents and liquid investments 2,391.2 3,713.1 Total borrowings and other financial liabilities (3,277.0) (3,172.6) Net (debt)/cash (885.8) 540.5 Antofagasta plc Annual Report 2022232 232 Antofagasta Annual Report 2022 ### 33 Exchange rates Assets and liabilities denominated in foreign currencies are translated into US dollars and Sterling at the period-end rates of exchange. Results denominated in foreign currencies have been translated into US dollars at the average rate for each period. 2022 2021 | | | $1.2080=£1; | | $1.3490=£1; | | --- | --- | --- | --- | --- | | Year-end rates | $1 = Ch$855.86 | | $1 = Ch$844.69 | | | | | $1.2340=£1; | | $1.3750=£1; | | Average rates | $1 = Ch$872.38 | | $1 = Ch$759.81 | | ### 34 Related party transactions Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and its associates and joint ventures are disclosed below. The transactions which Group companies entered into with related parties who are not members of the Group are set out below. There are no guarantees given or received and no provisions for doubtful debts related to the amount of outstanding balances. A) Quiñenco SA Quiñenco SA (“Quiñenco”) is a Chilean financial and industrial conglomerate, the shares of which are traded on the Santiago Stock Exchange, and in which members of the Luksic family are interested. Two Directors of the Company, Jean-Paul Luksic and Andronico Luksic, are also directors of Quiñenco. The following transactions took place between the Group and the Quiñenco group of companies, all of which were on normal commercial terms at market rates: • the Group made purchases of fuel from ENEX SA, a subsidiary of Quiñenco, of $309.9 million (2021 – $263.9 million). The balance due to ENEX SA at the end of the year was $28.6 million (2021 – $20.4 million), • the Group earned interest income of $0.8 million (2021 – $0.1 million) during the year on investments with BanChile Administradora General de Fondos SA, a subsidiary of Quiñenco. Investment balances at the end of the year were nil (2021 – $2.2 million), • the Group purchased shipping services from Hapag Lloyd, an associate of Quiñenco, of $12.7 million (2021 – $8.9 million). The balance due to Hapag Lloyd at the end of the year was $0.3 million (2021 – $0.4 million), • the Group made purchases of technology services from ARTIKOS CHILE SA, a subsidiary of Quiñenco, of $0.2 million (2021 – $0.2 million). The balance due to ARTIKOS CHILE SA at the end of the year was nil (2021 – nil). B) Compañía de Inversiones Adriático SA In 2022, the Group leased office space on normal commercial terms from Compañía de Inversiones Adriático SA, a company in which members of the Luksic family are interested, at a cost of $0.4 million (2021 –$0.8 million). C) Antomin 2 Limited and Antomin Investors Limited The Group holds a 51% interest in Antomin 2 Limited (“Antomin 2”) and Antomin Investors Limited (“Antomin Investors”), which own a number of copper exploration properties. The Group originally acquired its 51% interest in these properties for a nominal consideration from Mineralinvest Establishment, which continues to hold the remaining 49% of Antomin 2 and Antomin Investors. Mineralinvest is owned by the E. Abaroa Foundation, in which members of the Luksic family are interested. During the year ended 31 December 2022, the Group incurred $0.1 million (year ended 31 December 2021 – $0.1 million) of exploration expense at these properties. D) Tethyan Copper Company Limited On 15 December 2022 Antofagasta entered into definitive agreements to exit its interest in the Tethyan joint venture, which is therefore no longer recognised as a joint venture by the Group. The group contributed nil (2021 - $9.5 million) to Tethyan during 2022. E) Compañia Minera Zaldívar SpA The Group has a 50% interest in Zaldívar (see Note 18), which is a joint venture with Barrick Gold Corporation. Antofagasta is the operator of Zaldívar. The balance due from Zaldívar to Group companies at the end of the year was $6.7 million (2021 – $2.5 million). During 2022, Zaldívar declared dividends of $50.0 million to the Group (2021 – $77.5 million). F) Directors and other key management personnel Information relating to Directors’ remuneration and interests is given in the Remuneration Report on page 159. Information relating to the remuneration of key management personnel including the Directors is given in Note 9. ### 35 Litigation and contingent liabilities The Group is subject from time to time to legal proceedings, claims, complaints and investigations arising out of the ordinary course of business. The Group cannot predict the outcome of individual legal actions or claims or complaints or investigations. As a result, the Group may become subject to liabilities that could affect our business, financial position and reputation. Litigation is inherently unpredictable and large judgements may at times occur. The Group may incur, in the future, judgements or enter into settlements of claims that could lead to material cash outflows. The Group considers that no material loss to the Group is expected to result from the legal proceedings, claims, complaints and investigations that the Group is currently subject to. Provisions are recognised when it is probable that the Group will be required to settle an obligation arising as a result of a legal claim against the Group. ### 36 Ultimate Parent Company The immediate parent of the Group is Metalinvest Establishment, which is controlled by the E. Abaroa Foundation, in which members of the Luksic family are interested. Both Metalinvest Establishment and the E. Abaroa Foundation are domiciled in Liechtenstein. Information relating to the interest of Metalinvest Establishment and the E. Abaroa Foundation is given in the Directors’ Report. Antofagasta plc Annual Report 2022 233 antofagasta.co.uk 233 Financial Statements # Financial statements of the Parent Company (Antofagasta plc) ## Parent Company balance sheet | | Note | 2022 $m | 2021 $m | | --- | --- | --- | --- | | **Non-current assets** | | | | | Investment in subsidiaries | 5 | 589.1 | 529.1 | | Other receivables^{1} | 5 | 54.0 | 54.0 | | Property, plant and equipment | | 4.4 | 5.1 | | | | **647.5** | **588.2** | | **Current assets** | | | | | Other receivables^{1} | 5 | 744.6 | 3.8 | | Liquid investments | | 457.6 | 1,649.4 | | Cash and cash equivalents | | 238.5 | 422.8 | | | | **1,440.7** | **2,076.0** | | **Total assets** | | **2,088.2** | **2,664.2** | | **Current liabilities** | | | | | Amounts payable to subsidiaries | 6 | (615.7) | (302.2) | | Other payables | | (9.2) | (15.4) | | | | **(624.9)** | **(317.6)** | | **Non-current liabilities** | | | | | Medium and long-term borrowings | 7 | (992.2) | (993.4) | | | | **(992.2)** | **(993.4)** | | **Total liabilities** | | **(1,617.1)** | **(1,311.0)** | | **Net assets** | | **471.1** | **1,353.2** | | **Equity** | | | | | Share capital | | 89.8 | 89.8 | | Share premium | | 199.2 | 199.2 | | Retained earnings | | | | | At 1 January | | 1,064.2 | 626.0 | | Profit for the year attributable to the owners | | 380.8 | 1,149.0 | | Dividends | | (1,262.9) | (710.8) | | **At 31 December** | | **182.1** | **1,064.2** | | **Total equity** | | **471.1** | **1,353.2** | 1. The prior period comparatives have been restated to reflect a reclassification from current other receivables to non-current other receivables of $54.0 million (see note 5). The financial statements on pages 234 to 237 were approved by the Board of Directors on 23 March 2023 and signed on its behalf by Jean-Paul Luksic Chairman Senior Independent Director 234 Antofagasta plc Annual Report 2022 ## Parent Company statement of changes in equity | | Share capital $m | Share premium $m | Retained earnings $m | Total equity $m | | --- | --- | --- | --- | --- | | **At 1 January 2021** | 89.8 | 199.2 | 626.0 | 915.0 | | Comprehensive income for the year | – | – | 1,149.0 | 1,149.0 | | Dividends | – | – | (710.8) | (710.8) | | **At 31 December 2021** | 89.8 | 199.2 | 1,064.2 | 1,353.2 | | Comprehensive income for the year | – | – | 380.8 | 380.8 | | Dividends | – | – | (1,262.9) | (1,262.9) | | **At 31 December 2022** | **89.8** | **199.2** | **182.1** | **471.1** | 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. ## 1 Basis of preparation of the Parent Company financial statements 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' - Paragraph 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 inter-company 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 $380.8 million (2021 – $1,149.0 million). Antofagasta plc Annual Report 2022 235 Financial Statements / Financial statements of the Parent Company (Antofagasta plc) contin ued ### 2 Principal accounting policies of the Parent Company A summary of the principal accounting policies is set out below. These accounting policies have been applied consistently. A) Currency translation 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. B) Revenue recognition 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. C) Dividends payable 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. D) Investments in subsidiaries 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. E) Liquid investments and cash and cash equivalents 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. F) Borrowings 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. G) Borrowings – preference shares 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. H) Equity instruments – ordinary share capital and share premium 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. I) Financing facilities On 30 December, 2022, 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 23F). ### 3 Significant accounting estimates and judgements 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 2022 of $589.1 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 inter-company 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 relevant overstatement of these carrying values. In assessing this, the Group has considered the overall market capitalisation of the Group, which was $18.4 billion at 31 December 2022, the cash and other assets held by the relevant Group companies and the level of earnings generated by the Group’s operations. Antofagasta plc Annual Report 2022236 236 Antofagasta Annual Report 2022 ## 4 Employee Benefit Expense ### i) Average number of employees The average monthly number of employees was 4 (2021 – 4), engaged in management and administrative activities. ### ii) Aggregate remuneration The aggregate remuneration of the employees mentioned above was as follows: | | 2022 $m | 2021 $m | | --- | --- | --- | | Wages and salaries | 2.3 | 2.3 | | Social security costs | 0.3 | 0.3 | | Other pension costs | 0.1 | 0.1 | | | 2.7 | 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. ## 5 Subsidiaries ### i) Investment in subsidiaries | | 2022 $m | 2021 $m | | --- | --- | --- | | Shares in subsidiaries at cost^{1} | 120.6 | 60.6 | | Amounts owed by subsidiaries due after more than one year | 468.5 | 468.5 | | | 589.1 | 529.1 | | | Shares $m | Loans $m | Total $m | | --- | --- | --- | --- | | 1 January 2022 | 60.6 | 468.5 | 529.1 | | **31 December 2022** | **120.6** | **468.5** | **589.1** | 1. The $60.0m 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 Company has reviewed whether there are any indicators of impairment in respect of the investment balance and concluded that there are no such indicators. The above amount of $468.5 million (31 December 2021 – $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. ### ii) Trade and other receivables – amounts owed by subsidiaries due after one year At 31 December 2022, an amount of $54.0 million (31 December 2021 – $54.0 million) was owed to the Company by indirect subsidiaries. This amount is not expected to be realised within twelve months after the reporting period. The prior period comparatives have been restated to reflect a reclassification of this amount from current other receivables to non-current other receivables, again reflecting that this amount was not expected to be realised within twelve months after the reporting period. There have been no impairments recognised in respect of subsidiary receivables as at 31 December 2022. ### iii) Trade and other receivables – amounts owed by subsidiaries due within one year At 31 December 2022, amounts owed by subsidiaries due within one year were $744.6 million (31 December 2021 – $3.8 million). These balances principally relate to $410.0 million inter-company dividends declared but not yet paid to the Company by its immediate subsidiary companies. In addition, there is a $328.0 million receivable balance relating to short-term intragroup funding arrangements. There have been no impairments recognised in respect of subsidiary receivables as at 31 December 2022. ## 6 Amounts payable to subsidiaries At 31 December 2022, amounts payable to subsidiaries due within one year were $615.7 million (31 December 2021 – $302.2 million). This increase in the balance during the year reflects a $328.0 million payable balance relating to short-term intragroup funding arrangements. ## 7 Borrowings – preference shares 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 2022 and 31 December 2021. As explained in Note 23C, 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 23A (x)) at any general meeting. Antofagasta plc Annual Report 2022 237 Other Information # Alternative performance measures (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. ## A) Underlying earnings per share Underlying earnings per share is earnings per share from continuing operations, excluding exceptional items. This measure is reconciled to earnings per share from continuing and discontinued 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. ## B) EBITDA 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 2022 | | Los Pelambres $m | Centinela $m | Antucoya $m | Zaldivar $m | Exploration and evaluation $m | Corporate and other items $m | Mining $m | Transport division $m | Total $m | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Operating profit/(loss) | 1,196.2 | 446.0 | 155.6 | – | (113.0) | (94.3) | 1,590.5 | 43.8 | 1,634.3 | | Depreciation | 276.1 | 710.2 | 105.6 | – | – | 18.7 | 1,110.6 | 30.5 | 1,141.1 | | Loss on disposal | 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** | For the year ended 31 December 2021 | | Los Pelambres $m | Centinela $m | Antucoya $m | Zaldivar $m | Exploration and evaluation $m | Corporate and other items $m | Mining $m | Transport division $m | Total $m | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Operating profit/(loss) | 2,240.5 | 1,260.6 | 238.3 | – | (280.8) | (89.0) | 3,369.6 | 31.8 | 3,401.4 | | Depreciation | 281.8 | 654.7 | 98.3 | – | – | 13.0 | 1,047.8 | 30.9 | 1,078.7 | | Loss on disposals | 3.7 | 4.0 | 0.5 | – | – | – | 8.2 | 1.0 | 9.2 | | Provision against the carrying value of assets^{1} | – | – | – | – | 177.6 | – | 177.6 | – | 177.6 | | **EBITDA from subsidiaries** | **2,526.0** | **1,919.3** | **337.1** | **–** | **(103.2)** | **(76.0)** | **4,603.2** | **63.7** | **4,669.9** | | **Proportional share of the EBITDA from associates and JV** | **–** | **–** | **–** | **172.8** | **–** | **(8.0)** | **164.8** | **4.5** | **169.3** | | **EBITDA** | **2,526.0** | **1,919.3** | **337.1** | **172.8** | **(103.2)** | **(84.0)** | **4,768.0** | **68.2** | **4,836.2** | 1. An impairment has been recognised as at 31 December 2021 in respect of the $177.6 million of intangible assets and property, plant and equipment relating to the Twin Metals project, presented as an exceptional item. 238 Antofagasta plc Annual Report 2022 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. 2022 2021 $m $m Reconciliation of cash costs excluding treatment and refining charges and by-product revenue: Total Group operating cost (Note 6) 4,227.7 4,068.7 Zaldívar operating costs (attributable basis – 50%) 234.4 231.7 Less: | Depreciation (Note 6) (1,141.1) | (1,078.7) | | | --- | --- | --- | | Loss on disposal (Note 6) (2.1) | | (9.2) | | Provision against the carrying value of assets – | | (177.6) | Elimination of non-mining operations: Corporate and other items – Total operating cost (excluding depreciation) (Note 6) (75.0) (76.0) Exploration and evaluation – Total operating cost (excluding depreciation) (Note 6) (113.0) (103.2) Transport division – Total operating cost (excluding depreciation) (Note 6) (119.1) (106.3) Closure provision and other expenses not included within cash costs (97.6) (90.7) Inventory variation (12.0) 2.1 Total cost relevant to the mining operations’ cash costs 2,902.2 2,660.8 1 Copper production volumes (tonnes) 646,200 721,450 Cash costs excluding treatment and refining charges and by-product revenue ($/tonne) 4,491 3,688 Cash costs excluding treatment and refining charges and by-product revenue ($/lb) 2.05 1.68 Reconciliation of cash costs before deducting by-product revenue: Treatment and refining charges – copper and by-product – Los Pelambres 108.5 115.4 Treatment and refining charges – copper and by-product – Centinela 78.8 70.4 Treatment and refining charges – copper – total 187.3 185.8 Copper production volumes (tonnes) 646,200 721,450 Treatment and refining charges ($/tonne) 289.9 257.5 Treatment and refining charges ($/lb) 0.14 0.11 Cash costs excluding treatment and refining charges and by-product revenue ($/lb) 2.05 1.68 Treatment and refining charges ($/lb) 0.14 0.11 Cash costs before deducting by-product revenue ($/lb) 2.19 1.79 1. The 646,200 tonnes includes 44,500 tonnes of production at Zaldívar on a 50% attributable basis. Antofagasta plc Annual Report 2022 239 antofagasta.co.uk 239 Other Information / Alternative performance measures *continued* # **C) Cash costs** *continued* | | 2022 $m | 2021 $m | | --- | --- | --- | | **Reconciliation of cash costs (net of by-product revenue):** | | | | Gold revenue – Los Pelambres (Note 6) | 75.5 | 91.2 | | Gold revenue – Centinela (Note 6) | 239.0 | 346.2 | | Molybdenum revenue – Los Pelambres (Note 6) | 311.9 | 353.6 | | Molybdenum revenue – Centinela (Note 6) | 110.2 | 44.4 | | Silver revenue – Los Pelambres (Note 6) | 33.1 | 46.6 | | Silver revenue – Centinela (Note 6) | 25.1 | 38.7 | | Total by-product revenue | 794.8 | 920.7 | | Copper production volumes (tonnes)^{1} | 646,200 | 721,450 | | By-product revenues ($/tonne) | 1,230.0 | 1,276.0 | | By-product revenues ($/lb) | 0.58 | 0.59 | | Cash costs before deducting by-product revenue ($/lb) | 2.19 | 1.79 | | By-product revenue ($/lb) | (0.58) | (0.59) | | Cash costs (net of by-product revenue) ($/lb) | 1.61 | 1.20 | 1. The 646,200 tonnes includes 44,500 tonnes of production at Zaldívar on a 50% attributable basis. The totals in the tables above may include some small apparent differences as the specific individual figures have not been rounded. 240 Antofagasta plc Annual Report 2022 D) Attributable cash, cash equivalents and liquid investments, borrowings and net debt 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. 2022 2021 Total Attributable Attributable Total Attributable Attributable amount share amount amount share amount $m $m $m $m $m $m Cash, cash equivalents and liquid investments: | Los Pelambres 655.4 60% 393.2 | 427.9 60% 256.7 | | | --- | --- | --- | | Centinela 348.5 70% 244.0 | 625.3 70% 437.7 | | | Antucoya 111.8 70% 78.3 | 181.5 70% 127.1 | | | Corporate 1,247.0 100% 1,247.0 2,436.5 | | 100% 2,436.5 | | Transport division 28.5 100% 28.5 | 41.9 100% 41.9 | | Total (Note 22) 2,391.2 1,991.0 3,713.1 3,299.9 Borrowings: Los Pelambres (Note 23) (1,525.8) 60% (915.5) (1,243.1) 60% (745.9) Centinela (Note 23) (311.9) 70% (218.3) (446.6) 70% (312.6) Antucoya (Note 23) (411.5) 70% (288.1) (439.2) 70% (307.5) Corporate (Note 23) (1,010.9) 100% (1,010.9) (1,016.5) 100% (1,016.4) Transport division (Note 23) (16.9) 100% (16.9) (27.2) 100% (27.2) Total (Notes 23 and 32) (3,277.0) (2,449.7) (3,172.6) (2,409.6) Net (debt)/cash (885.8) (458.7) 540.5 890.3 Antofagasta plc Annual Report 2022 241 antofagasta.co.uk 241 Other information # Five Year Summary | | 2022 $m | 2021 $m | 2020 $m | 2019 $m | 2018 $m | | --- | --- | --- | --- | --- | --- | | **Consolidated balance sheet** | | | | | | | Intangible asset | – | – | 150.1 | 150.1 | 150.1 | | Property plant and equipment | **11,543.5** | 10,538.5 | 9,851.9 | 9,556.7 | 9,184.1 | | Other non-current assets | **1.1** | 1.3 | 2.6 | 2.1 | 2.6 | | Inventories | **347.0** | 270.4 | 278.1 | 208.0 | 172.7 | | Investment in associates and joint ventures | **904.6** | 905.8 | 914.6 | 1,024.8 | 1,056.1 | | Trade and other receivables | **51.0** | 51.2 | 55.9 | 48.2 | 56.1 | | Derivative financial instruments | – | – | 0.3 | 1.7 | – | | Equity investments | **90.5** | 8.7 | 11.1 | 5.1 | 4.7 | | Deferred tax assets | **78.5** | 96.8 | 6.4 | 8.2 | 37.2 | | Non-current assets | **13,016.2** | 11,872.7 | 11,271.0 | 11,004.9 | 10,663.6 | | Current assets | **5,222.1** | 5,405.7 | 5,333.3 | 3,605.5 | 3,438.9 | | Current liabilities | **(1,605.8)** | (1,574.2) | (1,625.7) | (1,548.9) | (1,307.1) | | Non-current liabilities | **(4,988.1)** | (4,675.2) | (4,897.5) | (3,660.5) | (3,357.3) | | | **11,644.4** | 11,029.0 | 10,081.1 | 9,401.0 | 9,438.1 | | Share capital | **89.8** | 89.8 | 89.8 | 89.8 | 89.8 | | Share premium | **199.2** | 199.2 | 199.2 | 199.2 | 199.2 | | Reserves (retained earnings and hedging, translation and fair value reserves) | **8,338.5** | 8,061.2 | 7,461.6 | 7,094.7 | 7,070.4 | | Equity attributable to owners of the parent | **8,627.5** | 8,350.2 | 7,750.6 | 7,383.7 | 7,359.4 | | Non-controlling interests | **3,016.9** | 2,678.8 | 2,330.5 | 2,017.3 | 2,078.7 | | | **11,644.4** | 11,029.0 | 10,081.1 | 9,401.0 | 9,438.1 | | **Consolidated income statement** | | | | | | | Group revenue | **5,862.0** | 7,470.1 | 5,129.3 | 4,964.5 | 4,733.1 | | Total profit from operations and associates | **2,627.1** | 3,461.1 | 1,516.5 | 1,400.2 | 1,367.2 | | Profit before tax | **2,558.9** | 3,477.1 | 1,413.1 | 1,349.2 | 1,252.7 | | Income tax expense | **(603.6)** | (1,242.3) | (526.5) | (506.1) | (423.7) | | Profit from continuing operations | **1,955.3** | 2,234.8 | 886.6 | 843.1 | 829.0 | | Profit from discontinued operations | – | – | 7.3 | – | 51.3 | | Profit for the year | **1,955.3** | 2,234.8 | 893.9 | 843.1 | 880.3 | | Non-controlling interests | **(422.3)** | (944.6) | (387.5) | (341.7) | (336.6) | | Net earnings (profit attributable to owners of the parent) | **1,533.0** | 1,290.2 | 506.4 | 501.4 | 543.7 | | EBITDA | **2,929.7** | 4,836.2 | 2,739.2 | 2,438.9 | 2,228.3 | | **Earnings per share** | | | | | | | Basic and diluted earnings per share | **155.5** | 130.9 | 51.3 | 50.9 | 55.1 | 242 Antofagasta plc Annual Report 2022 2022 2021 2020 2019 2018 cents cents cents cents cents Dividends per share proposed in relation to the year Ordinary dividends (interim and final) 59.7 142.5 54.7 34.1 43.8 59.7 142.5 54.7 34.1 43.8 Dividends per share paid in the year and deducted from equity 128.1 72.1 13.3 47.7 47.4 2022 2021 2020 2019 2018 $m $m $m $m $m Consolidated cash flow statement Cash flow from continuing operations 2,738.3 4,507.7 2,431.1 2,570.7 1,877.0 Interest paid (74.3) (60.7) (52.7) (76.3) (68.2) Income tax paid (787.1) (776.9) (319.7) (403.6) (498.0) Net cash from operating activities 1,876.9 3,670.1 2,058.7 2,090.8 1,310.8 Investing activities Acquisition and disposal of subsidiaries, joint venture and associates – – – – 145.2 Dividends from associates 50.0 142.5 – 58.0 16.6 Equity investments, investing activities and recovery of VAT 1,322.4 (577.2) (893.5) (678.3) 284.2 Purchases and disposals of intangible assets, property, plant and equipment (1,879.0) (1,776.0) (1,306.6) (1,076.9) (872.2) Interest received 29.1 7.4 12.6 41.0 26.4 Net cash used in investing activities (477.5) (2,203.3) (2,187.5) (1,656.2) (399.8) Financing activities Dividends paid to owners of the parent (1,262.9) (710.8) (131.1) (470.3) (466.9) Dividends paid to preference holders and non-controlling interests (80.1) (604.6) (280.1) (400.1) (120.1) Capital increase from non-controlling interest – – 210.0 – – New borrowings less repayment of borrowings and leases 9.2 (634.5) 918.3 60.8 (347.1) Net cash (used in)/generated from financing activities (1,333.8) (1,949.9) 717.1 (809.6) (934.1) Net increase/(decrease) in cash and cash equivalents 65.6 (483.1) 588.3 (375.0) (23.1) 2022 2021 2020 2019 2018 $m $m $m $m $m Consolidated net cash Cash, cash equivalents and liquid investments 2,391.2 3,713.1 3,672.8 2,193.4 1,897.6 | Short-term borrowings (432.5) (337.1) (603.4) (723.9) | | (646.0) | | --- | --- | --- | | Medium and long-term borrowings (2,844.5) (2,835.5) (3,151.4) (2,032.9) | | (1,847.9) | | | (3,277.0) (3,172.6) (3,754.8) (2,756.8) | (2,493.9) | | Net (debt)/cash at the year-end (885.8) 540.5 (82.0) (563.4) | | (596.3) | Antofagasta plc Annual Report 2022 243 antofagasta.co.uk 243 Other Information ## Production statistics | | P | | | r o d | u c t | i o n S | | | a l e | s N | | e t | c a s | h c o | s t s | R | | e a | l i s e | d p r i | c e s | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2 0 | 2 2 | | 2021 | | 2 0 | 2 2 | 2021 | | | | | | | | | | | | | | Production and sales volumes, realised prices and cash | | ‘ 0 | 0 0 | | ‘000 | | ‘ 0 | 0 0 | ‘000 | | 2 0 2 | 2 | | 2021 | | | 2 0 2 | 2 | | 2021 | | | costs by mine | | t o n n | e s | | tonnes | | t o n n | e s | tonnes | | ‘ 0 $ / l | b | | 00$/lb | | | $ / | l b | | ‘0$/lb | | Copper P r o d u c t i o n S a l e s N e t c a s h c o s t s R e a l i s e d p r i c e s Los Pelambres 275.0 324.7 271.2 324.5 1.10 0.89 3.76 4.54 2 0 2 2 2 0 2 2 Centinela 247.5 274.2 246.1 276.1 1.75 1.13 3.89 4.31 ‘ 0 0 0 ‘ 0 0 0 2 0 2 2 2 0 2 2 t o n n e s t o n n e s ‘ 0 $ / l b $ / l b Antucoya 79.2 78.6 80.8 80.4 2.50 2.04 3.95 3.94 Zaldívar (attributable basis – 50%) 44.5 44.0 44.4 44.6 2.39 2.39 – – Group total 646.2 721.5 642.5 725.6 1.61 1.20 3.84 4.37 Group weighted average (net cash costs) Group weighted average (excluding treatment and refining charges and before by-products) 2.05 1.68 Group weighted average (before by-product credits) 2.19 1.79 Cash costs at Los Pelambres comprises Cash costs before by-product credits 1.84 1.59 By-product credits (principally molybdenum and gold) (0.74) (0.70) Net cash costs 1.10 0.89 Cash cost at Centinela comprises Cash costs before by-product credits 2.44 1.87 By-product credits (principally gold) (0.69) (0.74) Net cash costs 1.75 1.13 LME average 4.00 4.23 Production Sales Realised prices | 2022 | 2021 | 2022 | 2021 | | | | --- | --- | --- | --- | --- | --- | | ‘000 | ‘000 | ‘000 | ‘000 | 2022 | 2021 | | ounces | ounces | ounces | ounces | $/oz | $/oz | Gold Los Pelambres 43.1 53.2 42.3 51.1 1,785 1,783 Centinela 133.7 199.0 132.3 193.5 1,806 1,789 Group total 176.8 252.2 174.6 244.6 1,801 1,788 | Market average price | | | 1,800 1,799 | | | | | --- | --- | --- | --- | --- | --- | --- | | | ‘000 | ‘000 | | ‘000 | ‘000 | | | | tonnes | tonnes | | tonnes | tonnes | $/lb $/lb | Molybdenum Los Pelambres 7.2 9.2 6.8 9.2 20.9 17.5 Centinela 2.4 1.3 2.4 1.2 20.5 17.2 Group total/average realised price 9.6 10.5 9.2 10.4 20.8 17.4 Market average price 18.7 15.9 Antofagasta plc Annual Report 2022244 244 Antofagasta Annual Report 2022 / Ore reserves and mineral resources estimates ## Ore reserves and mineral resources ## estimates At 31 December 2022 Introduction An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for The ore reserves and mineral resources estimates, presented in this which tonnage, densities, shape, physical characteristics, grade and report, comply with the requirements of the Australasian Code for mineral content can be estimated with a reasonable level of confidence. Reporting of Exploration Results, Mineral Resources and Ore Reserves It is based on exploration, sampling and testing information gathered 2012 edition (the JORC Code) which has been used by the Group as through appropriate techniques from locations such as outcrops, minimum standard for the preparation and disclosure of the information trenches, pits, workings and drill holes. The locations are too widely contained herein. The definitions and categories of ore reserves or inappropriately spaced to confirm geological and/or grade continuity and mineral resources are set out below. but are spaced closely enough for continuity to be assumed. The information on ore reserves and mineral resources was prepared A ‘Measured Mineral Resource’ is that part of a Mineral Resource for by or under the supervision of Competent Persons as defined in the which tonnage, densities, shape, physical characteristics, grade and JORC Code. The Competent Persons have sufficient experience relevant mineral content can be estimated with a high level of confidence. It is to the style of mineralisation and type of deposit under consideration based on detailed and reliable exploration, sampling and testing and to the activity which they are undertaking. The Competent Persons information gathered through appropriate techniques from locations consent to the inclusion in this report of the matters based on their such as outcrops, trenches, pits, workings and drill holes. The locations information in the form and context in which it appears. The Competent are spaced closely enough to confirm geological and grade continuity. Person for Exploration Results and Mineral Resources is Osvaldo Galvez An ‘Ore Reserve’ is the economically mineable part of a Measured and/ (CP, Chile), Deputy Manager of Mineral Resource Evaluation for or Indicated Mineral Resource. It includes diluting materials and Antofagasta Minerals SA. The Competent Person for Ore Reserves allowances for losses, which may occur when the material is mined. is Sofia Orellana (CP, Chile), Deputy Manager of Long-Term Mining Appropriate assessments and studies have been carried out and include Planning for Antofagasta Minerals SA. realistic consideration on modifying factors such as mining method, The Group’s operations and projects are subject to a comprehensive metallurgical process and economic, marketing, legal, environmental, programme of audits aimed at providing assurance in respect of ore social and governmental factors. These assessments demonstrate at the reserves and mineral resources estimates. The audits are conducted by time of reporting that extraction could reasonably be justified. Ore suitably qualified Competent Persons from within an operation, another Reserves are sub-divided in order of increasing confidence into operation of the Company or from independent consultants. The ore Probable Ore Reserves and Proved Ore Reserves. reserves and mineral resources estimates are the total reserves and A ‘Probable Ore Reserve’ is the economically mineable part of an resources, with the Group’s attributable share for each mine shown in Indicated, and in some circumstances, a Measured Mineral Resource. the ‘Attributable Tonnage’ column. The Group’s economic interest in It includes diluting materials and allowances for losses which may occur each mine is disclosed in the notes following the estimates on pages when the material is mined. Appropriate assessments and studies have 254-255. The totals in the table may include some small apparent been carried out and include realistic consideration on modifying factors differences due to rounding. such as mining method, metallurgical process and economic, marketing, legal, environmental, social and governmental factors. These Definitions and categories of ore reserves and mineral assessments demonstrate at the time of reporting that extraction resources could reasonably be justified. 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 A ‘Proved Ore Reserve’ is the economically mineable part of a Measured and quantity that there are reasonable prospects for eventual economic Mineral Resource. It includes diluting materials and allowances for losses extraction. The location, quantity, grade, geological characteristics and which may occur when the material is mined. Appropriate assessments continuity of a Mineral Resource are known, estimated or interpreted and studies have been carried out and include realistic consideration on from specific geological evidence and knowledge. Mineral Resources are modifying factors such as mining method, metallurgical process and sub-divided, in order of increasing geological confidence, into Inferred, economic, marketing, legal, environmental, social and governmental Indicated and Measured categories. factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified. 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 drill holes which may be limited or of uncertain quality and reliability. Antofagasta plc Annual Report 2022 245 Other information / Ore reserves and mineral resources estimates *continued* # **Ore reserves estimates** | Group Subsidiaries | Tonnage (millions of tonnes) | | | Copper (%) | Molybdenum (%) | | | Gold (g/tonne) | Attributable Tonnage (millions of tonnes) | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | | **Ore reserves** | | | | | | | | | | | | **Los Pelambres (see note (a))** | | | | | | | | | | | | Proved | 574.8 | 612.3 | 0.60 | 0.60 | 0.020 | 0.020 | 0.05 | 0.05 | 344.9 | 367.4 | | Probable | 330.6 | 343.8 | 0.57 | 0.57 | 0.020 | 0.019 | 0.05 | 0.05 | 198.4 | 206.3 | | **Total** | **905.5** | **956.1** | **0.59** | **0.59** | **0.020** | **0.020** | **0.05** | **0.05** | **543.3** | **573.7** | | **Centinela (see note (b))** | | | | | | | | | | | | **Centinela Cathodes (oxides)** | | | | | | | | | | | | Proved | 59.1 | 76.4 | 0.50 | 0.54 | | | | | 41.4 | 53.5 | | Probable | 215.4 | 222.9 | 0.33 | 0.34 | | | | | 150.8 | 156.1 | | **Subtotal** | **274.5** | **299.3** | **0.37** | **0.39** | | | | | **192.1** | **209.5** | | **Centinela Concentrates (sulphides)** | | | | | | | | | | | | Proved | 509.2 | 545.6 | 0.44 | 0.45 | 0.012 | 0.012 | 0.17 | 0.17 | 356.5 | 381.9 | | Probable | 1,203.6 | 1,138.7 | 0.38 | 0.39 | 0.012 | 0.013 | 0.12 | 0.12 | 842.5 | 797.1 | | **Subtotal** | **1,712.8** | **1,684.3** | **0.40** | **0.41** | **0.012** | **0.012** | **0.13** | **0.14** | **1,198.9** | **1,179.0** | | Proved | 568.3 | 622.0 | 0.45 | 0.46 | | | | | 397.8 | 435.4 | | Probable | 1,418.9 | 1,361.6 | 0.38 | 0.38 | | | | | 993.2 | 953.1 | | **Total** | **1,987.2** | **1,983.6** | **0.40** | **0.40** | | | | | **1,391.1** | **1,388.5** | | **Antucoya (see note (c))** | | | | | | | | | | | | Proved | 436.2 | 435.9 | 0.33 | 0.33 | | | | | 305.3 | 305.1 | | Probable | 281.4 | 309.6 | 0.29 | 0.30 | | | | | 197.0 | 216.7 | | **Total** | **717.6** | **745.5** | **0.31** | **0.32** | | | | | **502.3** | **521.9** | | **Total Group Subsidiaries** | **3,610.3** | **3,685.3** | **0.43** | **0.43** | | | | | **2,436.7** | **2,484.1** | | Group Joint Ventures | Tonnage (millions of tonnes) | | | Copper (%) | Molybdenum (%) | | | Gold (g/tonne) | Attributable Tonnage (millions of tonnes) | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | | **Ore reserves** | | | | | | | | | | | | **Zaldivar (see note (n))** | | | | | | | | | | | | Proved | 337.9 | 366.6 | 0.44 | 0.45 | | | | | 169.0 | 183.3 | | Probable | 75.2 | 84.3 | 0.31 | 0.34 | | | | | 37.6 | 42.1 | | **Total** | **413.2** | **450.8** | **0.42** | **0.43** | | | | | **206.6** | **225.4** | | **Total Group** | **4,023.5** | **4,136.2** | **0.43** | **0.43** | | | | | **2,643.3** | **2,709.5** | 246 Antofagasta plc Annual Report 2022 # Mineral resources estimates (including ore reserves) | Group Subsidiaries | Tonnage (millions of tonnes) | | | Copper (%) | Molybdenum (%) | | | Gold (g/tonne) | Attributable Tonnage (millions of tonnes) | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | | **Los Pelambres (see note (a))** | | | | | | | | | | | | **Sulphides** | | | | | | | | | | | | Measured | 1,054 | 1,093 | 0.57 | 0.58 | 0.020 | 0.020 | 0.05 | 0.05 | 632.6 | 656.1 | | Indicated | 2,121 | 2,135 | 0.52 | 0.52 | 0.016 | 0.016 | 0.05 | 0.05 | 1,272.9 | 1,281.0 | | Measured + Indicated | 3,176 | 3,228 | 0.54 | 0.54 | 0.018 | 0.018 | 0.05 | 0.05 | 1,905.5 | 1,937.1 | | Inferred | 2,780 | 2,729 | 0.46 | 0.46 | 0.016 | 0.016 | 0.06 | 0.06 | 1,667.7 | 1,637.4 | | **Total** | **5,955** | **5,957** | **0.50** | **0.50** | **0.017** | **0.017** | **0.05** | **0.06** | **3,573.2** | **3,574.5** | | **Los Pelambres total** | | | | | | | | | | | | Measured | 1,054 | 1,093 | 0.57 | 0.58 | 0.020 | 0.020 | 0.05 | 0.05 | 632.6 | 656.1 | | Indicated | 2,121 | 2,135 | 0.52 | 0.52 | 0.016 | 0.016 | 0.05 | 0.05 | 1,272.9 | 1,281.0 | | Measured + Indicated | 3,176 | 3,228 | 0.54 | 0.54 | 0.018 | 0.018 | 0.05 | 0.05 | 1,905.5 | 1,937.1 | | Inferred | 2,780 | 2,729 | 0.46 | 0.46 | 0.016 | 0.016 | 0.06 | 0.06 | 1,667.7 | 1,637.4 | | **Total** | **5,955** | **5,957** | **0.50** | **0.50** | **0.017** | **0.017** | **0.05** | **0.06** | **3,573.2** | **3,574.5** | | **Centinela (see note (b))** | | | | | | | | | | | | **Centinela Cathodes (oxides)** | | | | | | | | | | | | Measured | 101 | 110 | 0.47 | 0.52 | | | | | 70.7 | 76.7 | | Indicated | 297 | 316 | 0.32 | 0.32 | | | | | 207.6 | 221.3 | | Measured + Indicated | 398 | 426 | 0.36 | 0.37 | | | | | 278.3 | 298.0 | | Inferred | 15 | 16 | 0.33 | 0.33 | | | | | 10.6 | 11.3 | | **Subtotal** | **413** | **442** | **0.36** | **0.37** | | | | | **288.9** | **309.3** | | **Centinela Concentrates (sulphides)** | | | | | | | | | | | | Measured | 913 | 956 | 0.48 | 0.48 | 0.014 | 0.013 | 0.19 | 0.19 | 639.4 | 669.4 | | Indicated | 1,935 | 1,903 | 0.37 | 0.37 | 0.013 | 0.013 | 0.12 | 0.12 | 1,354.6 | 1,332.3 | | Measured + Indicated | 2,848 | 2,860 | 0.40 | 0.41 | 0.013 | 0.013 | 0.14 | 0.14 | 1,993.9 | 2,001.8 | | Inferred | 1,789 | 1,233 | 0.29 | 0.30 | 0.011 | 0.011 | 0.08 | 0.08 | 1,252.2 | 862.7 | | **Subtotal** | **4,637** | **4,092** | **0.36** | **0.38** | **0.012** | **0.013** | **0.12** | **0.12** | **3,246.2** | **2,864.5** | | **Centinela total** | | | | | | | | | | | | Measured | 1,014 | 1,066 | 0.48 | 0.49 | | | | | 710.1 | 746.2 | | Indicated | 2,232 | 2,220 | 0.36 | 0.36 | | | | | 1,562.2 | 1,553.6 | | Measured + Indicated | 3,246 | 3,285 | 0.40 | 0.40 | | | | | 2,272.2 | 2,299.8 | | Inferred | 1,804 | 1,249 | 0.29 | 0.30 | | | | | 1,262.9 | 874.0 | | **Total** | **5,050** | **4,534** | **0.36** | **0.38** | | | | | **3,535.1** | **3,173.8** | Antofagasta plc Annual Report 2022 247 Other Information / Ore reserves and mineral resources estimates continued # Mineral resources estimates (including ore reserves) continued | Group Subsidiaries | Tonnage (millions of tonnes) | | | Copper (%) | Molybdenum (%) | | | Gold (g/tonne) | Attributable Tonnage (millions of tonnes) | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | | **Antucoya (see note (c))** | | | | | | | | | | | | **Oxides** | | | | | | | | | | | | Measured | 463.7 | 465.4 | 0.32 | 0.33 | | | | | 324.6 | 325.7 | | Indicated | 348.5 | 388.9 | 0.29 | 0.30 | | | | | 244.0 | 272.2 | | Measured + Indicated | 812.3 | 854.3 | 0.31 | 0.31 | | | | | 568.6 | 598.0 | | Inferred | 302.3 | 337.4 | 0.26 | 0.26 | | | | | 211.6 | 236.2 | | **Total** | **1,114.6** | **1,191.6** | **0.30** | **0.30** | | | | | **780.2** | **834.1** | | **Antucoya total** | | | | | | | | | | | | Measured | 463.7 | 465.4 | 0.32 | 0.33 | | | | | 324.6 | 325.7 | | Indicated | 348.5 | 388.9 | 0.29 | 0.30 | | | | | 244.0 | 272.2 | | Measured + Indicated | 812.3 | 854.3 | 0.31 | 0.31 | | | | | 568.6 | 598.0 | | Inferred | 302.3 | 337.4 | 0.26 | 0.26 | | | | | 211.6 | 236.2 | | **Total** | **1,114.6** | **1,191.6** | **0.30** | **0.30** | | | | | **780.2** | **834.1** | | **Polo Sur (see note (d))** | | | | | | | | | | | | **Oxides** | | | | | | | | | | | | Measured | 46.6 | 32.4 | 0.45 | 0.49 | | | | | 46.6 | 32.4 | | Indicated | 59.7 | 69.5 | 0.38 | 0.40 | | | | | 59.7 | 69.5 | | Measured + Indicated | 106.4 | 101.9 | 0.41 | 0.43 | | | | | 106.4 | 101.9 | | Inferred | 6.2 | 6.6 | 0.30 | 0.41 | | | | | 6.2 | 6.6 | | **Subtotal** | **112.6** | **108.5** | **0.41** | **0.43** | | | | | **112.6** | **108.5** | | **Sulphides** | | | | | | | | | | | | Measured | 257.0 | 281.4 | 0.39 | 0.39 | 0.007 | 0.007 | 0.07 | 0.07 | 257.0 | 281.4 | | Indicated | 678.2 | 654.9 | 0.33 | 0.34 | 0.007 | 0.006 | 0.05 | 0.05 | 678.2 | 654.9 | | Measured + Indicated | 935.2 | 936.4 | 0.35 | 0.35 | 0.007 | 0.006 | 0.06 | 0.06 | 935.2 | 936.4 | | Inferred | 598.0 | 612.1 | 0.27 | 0.27 | 0.006 | 0.005 | 0.04 | 0.04 | 598.0 | 612.1 | | **Subtotal** | **1,533.2** | **1,548.5** | **0.32** | **0.32** | **0.006** | **0.006** | **0.05** | **0.05** | **1,533.2** | **1,548.5** | | **Polo Sur total** | | | | | | | | | | | | Measured | 303.7 | 313.8 | 0.40 | 0.40 | | | | | 303.7 | 313.8 | | Indicated | 737.9 | 724.5 | 0.34 | 0.34 | | | | | 737.9 | 724.5 | | Measured + Indicated | 1,041.6 | 1,038.3 | 0.36 | 0.36 | | | | | 1,041.6 | 1,038.3 | | Inferred | 604.2 | 618.7 | 0.27 | 0.27 | | | | | 604.2 | 618.7 | | **Total** | **1,645.8** | **1,657.0** | **0.32** | **0.33** | | | | | **1,645.8** | **1,657.0** | | **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 | 337.4 | 321.9 | 0.38 | 0.38 | | | 0.05 | 0.05 | 172.1 | 164.2 | | **Subtotal** | **337.4** | **321.9** | **0.38** | **0.38** | | | **0.05** | **0.05** | **172.1** | **164.2** | | **Penacho Blanco total** | | | | | | | | | | | | Measured | | | | | | | | | | | | Indicated | | | | | | | | | | | | Measured + Indicated | | | | | | | | | | | | Inferred | 355.7 | 340.2 | 0.37 | 0.37 | | | | | 181.4 | 173.5 | | **Total** | **355.7** | **340.2** | **0.37** | **0.37** | | | | | **181.4** | **173.5** | 248 Antofagasta plc Annual Report 2022 # Mineral resources estimates (including ore reserves) continued | Group Subsidiaries | Tonnage (millions of tonnes) | | | Copper (%) | Molybdenum (%) | | | Gold (g/tonne) | Attributable Tonnage (millions of tonnes) | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | | **Mirador (see note (f))** | | | | | | | | | | | | **Oxides** | | | | | | | | | | | | Measured | 2.5 | 2.0 | 0.28 | 0.29 | | | | | 1.8 | 1.6 | | Indicated | 26.8 | 22.6 | 0.27 | 0.27 | | | | | 20.2 | 17.6 | | Measured + Indicated | 29.2 | 24.6 | 0.27 | 0.28 | | | | | 22.0 | 19.2 | | Inferred | 11.1 | 9.7 | 0.26 | 0.27 | | | | | 8.9 | 7.6 | | **Subtotal** | **40.3** | **34.3** | **0.27** | **0.27** | | | | | **30.8** | **26.8** | | **Sulphides** | | | | | | | | | | | | Measured | 36.0 | 35.4 | 0.33 | 0.34 | 0.006 | 0.006 | 0.12 | 0.12 | 36.0 | 35.4 | | Indicated | 20.7 | 19.9 | 0.28 | 0.28 | 0.008 | 0.008 | 0.07 | 0.07 | 20.7 | 19.9 | | Measured + Indicated | 56.7 | 55.3 | 0.31 | 0.31 | 0.007 | 0.007 | 0.10 | 0.11 | 56.7 | 55.3 | | Inferred | 5.0 | 4.0 | 0.25 | 0.25 | 0.008 | 0.008 | 0.05 | 0.06 | 5.0 | 4.0 | | **Subtotal** | **61.8** | **59.2** | **0.31** | **0.31** | **0.007** | **0.007** | **0.10** | **0.10** | **61.8** | **59.2** | | **Mirador total** | | | | | | | | | | | | Measured | 38.5 | 37.4 | 0.33 | 0.33 | | | | | 37.8 | 36.9 | | Indicated | 47.5 | 42.5 | 0.27 | 0.28 | | | | | 40.9 | 37.5 | | Measured + Indicated | 86.0 | 79.8 | 0.30 | 0.30 | | | | | 78.7 | 74.4 | | Inferred | 16.1 | 13.7 | 0.26 | 0.26 | | | | | 13.9 | 11.6 | | **Total** | **102.1** | **93.5** | **0.29** | **0.30** | | | | | **92.6** | **86.0** | Antofagasta plc Annual Report 2022 249 Other Information / Ore reserves and mineral resources estimates continued # Mineral resources estimates (including ore reserves) continued | Group Subsidiaries | Tonnage (millions of tonnes) | | | Copper (%) | Molybdenum (%) | | | Gold (g/tonne) | Attributable Tonnage (millions of tonnes) | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | | **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 | 1,880.0 | 1,873.4 | 0.50 | 0.50 | 0.011 | 0.011 | | | 958.8 | 955.4 | | **Subtotal** | **1,880.0** | **1,873.4** | **0.50** | **0.50** | **0.011** | **0.011** | | | **958.8** | **955.4** | | **Los Volcanes total** | | | | | | | | | | | | Measured | | | | | | | | | | | | Indicated | | | | | | | | | | | | Measured + Indicated | | | | | | | | | | | | Inferred | 1,910.8 | 1,904.2 | 0.50 | 0.50 | | | | | 974.5 | 971.1 | | **Total** | **1,910.8** | **1,904.2** | **0.50** | **0.50** | | | | | **974.5** | **971.1** | | **Brujulina (see note (h))** | | | | | | | | | | | | **Oxides** | | | | | | | | | | | | Measured | | | | | | | | | | | | Indicated | | | | | | | | | | | | Measured + Indicated | | | | | | | | | | | | Inferred | 88.0 | 87.2 | 0.49 | 0.49 | | | | | 44.9 | 44.5 | | **Total** | **88.0** | **87.2** | **0.49** | **0.49** | | | | | **44.9** | **44.5** | | **Brujulina total** | | | | | | | | | | | | Measured | | | | | | | | | | | | Indicated | | | | | | | | | | | | Measured + Indicated | | | | | | | | | | | | Inferred | 88.0 | 87.2 | 0.49 | 0.49 | | | | | 44.9 | 44.5 | | **Total** | **88.0** | **87.2** | **0.49** | **0.49** | | | | | **44.9** | **44.5** | | **Sierra (see note (i))** | | | | | | | | | | | | **Oxides** | | | | | | | | | | | | Measured | | | | | | | | | | | | Indicated | | | | | | | | | | | | Measured + Indicated | | | | | | | | | | | | Inferred | 52.3 | 52.0 | 0.68 | 0.69 | | | | | 52.3 | 52.0 | | **Total** | **52.3** | **52.0** | **0.68** | **0.69** | | | | | **52.3** | **52.0** | | **Sierra total** | | | | | | | | | | | | Measured | | | | | | | | | | | | Indicated | | | | | | | | | | | | Measured + Indicated | | | | | | | | | | | | Inferred | 52.3 | 52.0 | 0.68 | 0.69 | | | | | 52.3 | 52.0 | | **Total** | **52.3** | **52.0** | **0.68** | **0.69** | | | | | **52.3** | **52.0** | | **Encierro (see note (j))** | | | | | | | | | | | | **Sulphides** | | | | | | | | | | | | Measured | | | | | | | | | | | | Indicated | | | | | | | | | | | | Measured + Indicated | | | | | | | | | | | | Inferred | 522.3 | | 0.65 | | 0.007 | | 0.22 | | 295.3 | | | **Subtotal** | **522.3** | | **0.65** | | **0.007** | | **0.22** | | **295.3** | | | **Encierro total** | | | | | | | | | | | | Measured | | | | | | | | | | | | Indicated | | | | | | | | | | | | Measured + Indicated | | | | | | | | | | | | Inferred | 522.3 | | 0.65 | | 0.007 | | 0.22 | | 295.3 | | | **Total** | **522.3** | | **0.65** | | **0.007** | | **0.22** | | **295.3** | | 250 Antofagasta plc Annual Report 2022 # Mineral resources estimates (including ore reserves) continued | Group Subsidiaries | Tonnage (millions of tonnes) | | | Copper (%) | Molybdenum (%) | | | Silver (g/tonne) | Attributable Tonnage (millions of tonnes) | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | | **Cachorro (see note (k))** | | | | | | | | | | | | **Oxides** | | | | | | | | | | | | Measured | | | | | | | | | | | | Indicated | 12.7 | | 1.15 | | | | | | 12.7 | | | Measured + Indicated | 12.7 | | 1.15 | | | | | | 12.7 | | | Inferred | 24.8 | 12.4 | 0.92 | 1.23 | | | | | 24.8 | 12.4 | | **Subtotal** | **37.6** | **12.4** | **1.00** | **1.23** | | | | | **37.6** | **12.4** | | **Sulphides** | | | | | | | | | | | | Measured | | | | | | | | | | | | Indicated | 36.7 | | 1.54 | | | | 6.21 | | 36.7 | | | Measured + Indicated | 36.7 | | 1.54 | | | | 6.21 | | 36.7 | | | Inferred | 168.2 | 129.2 | 1.19 | 1.21 | | | 3.49 | | 168.2 | 129.2 | | **Subtotal** | **204.9** | **129.2** | **1.25** | **1.21** | | | **3.98** | | **204.9** | **129.2** | | **Cachorro total** | | | | | | | | | | | | **Measured** | | | | | | | | | | | | Indicated | 49.4 | | 1.44 | | | | | | 49.4 | | | Measured + Indicated | 49.4 | | 1.44 | | | | | | 49.4 | | | Inferred | 193.0 | 141.6 | 1.15 | 1.21 | | | | | 193.0 | 141.6 | | **Total** | **242.5** | **141.6** | **1.21** | **1.21** | | | | | **242.5** | **141.6** | Antofagasta plc Annual Report 2022 251 Other information / Ore reserves and mineral resources estimates continued # Mineral resources estimates (including ore reserves) continued | Group Subsidiaries | Tonnage (millions of tonnes) | | | Copper (%) | | Nickel (%) | | TPM (g/tonne Au+Pt+Pd) | | Attributable Tonnage (millions of tonnes) | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 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 | 9,704.3 | 9,779.4 | 0.46 | 0.46 | | | | | 7,072.2 | 7,124.9 | | | Inferred | 9,844.2 | 8,688.5 | 0.44 | 0.44 | | | | | 5,720.9 | 5,656.3 | | | **Group Subsidiaries total** | **19,548.6** | **18,467.8** | **0.45** | **0.45** | | | | | **12,793.2** | **12,781.2** | | 252 Antofagasta plc Annual Report 2022 # Mineral resources estimates (including ore reserves) continued | Group Join Ventures | Tonnage (millions of tonnes) | | | Copper (%) | Molybdenum (%) | | | Gold (g/tonne) | Attributable Tonnage (millions of tonnes) | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | | **Zaldivar (see note (n))** | | | | | | | | | | | | **Oxides & Secondary Sulphides** | | | | | | | | | | | | Measured | 606.8 | 660.5 | 0.40 | 0.40 | | | | | 303.4 | 330.2 | | Indicated | 124.8 | 168.7 | 0.29 | 0.30 | | | | | 62.4 | 84.4 | | Measured + Indicated | 731.6 | 829.2 | 0.38 | 0.38 | | | | | 365.8 | 414.6 | | Inferred | 14.0 | 23.0 | 0.35 | 0.30 | | | | | 7.0 | 11.5 | | **Total** | **745.6** | **852.2** | **0.38** | **0.38** | | | | | **372.8** | **426.1** | | **Primary Sulphides** | | | | | | | | | | | | Measured | 113.8 | 119.5 | 0.41 | 0.41 | | | | | 56.9 | 59.8 | | Indicated | 265.6 | 309.8 | 0.40 | 0.40 | | | | | 132.8 | 154.9 | | Measured + Indicated | 379.4 | 429.3 | 0.41 | 0.40 | | | | | 189.7 | 214.7 | | Inferred | 25.2 | 28.3 | 0.37 | 0.37 | | | | | 12.6 | 14.1 | | **Subtotal** | **404.6** | **457.6** | **0.40** | **0.40** | | | | | **202.3** | **228.8** | | **Zaldivar total** | | | | | | | | | | | | Measured | 720.6 | 780.0 | 0.40 | 0.40 | | | | | 360.3 | 390.0 | | Indicated | 390.4 | 478.5 | 0.37 | 0.36 | | | | | 195.2 | 239.3 | | Measured + Indicated | 1,111.0 | 1,258.5 | 0.39 | 0.39 | | | | | 555.5 | 629.3 | | Inferred | 39.2 | 51.3 | 0.37 | 0.34 | | | | | 19.6 | 25.7 | | **Group Joint Ventures total** | **1,150.2** | **1,309.9** | **0.39** | **0.38** | | | | | **575.1** | **654.9** | | | | | | | | | | | | | | Total Group | Tonnage (millions of tonnes) | | | Copper (%) | Molybdenum (%) | | | Gold (g/tonne) | Attributable Tonnage (millions of tonnes) | | | | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | | Measured + Indicated | 10,815.3 | 11,037.9 | 0.45 | 0.45 | | | | | 7,596.2 | 7,701.5 | | Inferred | 9,883.4 | 8,739.8 | 0.44 | 0.44 | | | | | 6,481.7 | 5,746.7 | | **Total** | **20,698.8** | **19,777.7** | **0.45** | **0.44** | | | | | **14,077.9** | **13,448.0** | Antofagasta plc Annual Report 2022 253 Other information # / Ore reserves and mineral resources estimates *continued* # **Notes to ore reserves and mineral resources estimates** The ore reserves mentioned in this report were determined considering specific cut-off grades for each mine and using a long-term copper price of $3.30/lb ($3.10/lb in 2021), $13.00/lb molybdenum ($9.50/lb in 2021) and $1,600/oz gold ($1,500/oz in 2021), 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 $3.75/lb ($3.60/lb in 2021). 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, with audits carried out during 2022 on the Cachorro and Polo Sur resource models. 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 0.35% copper, while the cut-off grade applied for ore reserves is variable over 0.35% copper. Ore Reserves decreased in 51 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 decreased overall by a net 2 million tonnes, including depletion, higher mineral prices and stockpiles. # **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 (Tesoro Central and Tesoro Sur, oxide deposits, including the oxide portion of the Mirador, Encuentro and Llano deposits). 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 increased by a net 28 million tonnes, due mainly to the increase in metal prices. Centinela Concentrates mineral resources increased by a net 495 million tonnes, incorporating ore material that connects former Esperanza and Esperanza Sur resources, due mainly to higher product and by-product prices. The Centinela Cathodes ore reserves have decreased by a net 25 million tonnes, due mainly to depletion in the period. Centinela Cathodes ore reserves are made up of 160 million tonnes at 0.45% copper of heap leach ore and 114 million tonnes at 0.26% copper of ROM ore. Centinela Cathodes mineral resources decreased by a net 29 million tonnes, due mainly to 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 decreased by a net 28 million tonnes, due mainly to depletion in the period, partially compensated by an increase in ore stockpiles. For 2022 the mineral resource model has been updated with 51 drill holes for a total of 10,000 metres. Mineral resources have decreased by a net 77 million tonnes, due mostly to depletion, new drilling data and higher mining costs. # **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 2022 resource model has been updated with 105 drill holes for a total of 17,000 metres. Mineral resources have decreased by a net 11 million tonnes, due to the resource model update and the use of higher mining and processing costs in pit optimisation. # **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 2022 the resource model has not been updated. The mineral resources have increased by a net 15 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 9 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 2022 the mineral resource model has not been updated. The mineral resources have increased by a net 7 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 2022 the mineral resource model has not been updated. The mineral resources have increased by a net 1 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 2022 the mineral resource model has not been updated. The mineral resources have increased by a net 0.3 million tonnes, due mainly to the increase in metal prices. # **j) Encierro** Encierro is 56.55% owned by the Group. This is Encierro’s maiden mineral resource report, supported by 60,800 metres of drilling from 60 drill holes. In order to ensure that the stated mineral resources represent mineralisation that have “reasonable prospects for eventual economic extraction” (JORC code), 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. 254 Antofagasta plc Annual Report 2022 #### 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 2022 resource model has been updated included new drilling data and two newly discovered areas, adding 170 drill holes for a total of 108,000 metres. Mineral resources have increased by a net 100 million tonnes, due to the resource model update. Resources have been defined as indicated and inferred material and considering a copper price of $3.75. #### 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 portion of the main Maturi deposit. With these interests taken into consideration, Twin Metals owns 83.1% of the mineral resource. For 2022 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 August 2022, Twin Metals filed a claim in federal court challenging the administrative actions resulting in the rejection of the preference right lease applications ("PRLAs"), the cancellation of its federal leases 1352 and 1353, the rejection of its Mine Plan of Operations ("MPO") and the dismissal of the administrative appeal of the MPO rejection. That action is currently pending. The PRLAs and federal mineral leases form a significant proportion of the mineral resources contained within Twin Metals' current project plan. If TMM is unsuccessful 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 licences. #### n) Zaldivar Zaldivar 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 0.30% copper, while the cut-off grade for Dump Leach material is 0.21% copper. Ore reserves have decreased by a net 38 million tonnes, due mainly to depletion in the period. For mineral resources the cut-off grade is 0.18% 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 in 160 million tonnes because of the combined effects of depletion and increased mining and processing costs. In the southern part of the deposit (Phase 13), the final pit impacts a portion of Minera Escondida mine property and some infrastructures owned by third parties (road, railway, powerline and pipeline). Mining of Phase 13 is subject to agreements or easements to access these areas and relocate the infrastructure. Phase 13 represents 22% of the Zaldivar ore reserve. Zaldivar submitted an Environmental Impact Assessment (EIA) in 2018 which included an application to extend its water extraction and mining permits to 2029 (with decreasing activity levels in 2030-2031). Currently, Zaldivar is permitted to extract water and mine into 2025 and 2024, respectively. To ensure the continuity of the operation, in March 2023 Zaldivar submitted a DIA (Declaration of Environmental Impact), a more limited scope and simplified procedure than an EIA, requesting that the mining permit be extended from 2024 to 2025 so as to expire at the same date as the current water permit. At the same time Zaldivar withdrew the 2018 EIA application. It is expected that an alternative and updated EIA application to extend the water and mining permits beyond 2025 will be submitted which will also include a plan for a transition from the current continental water source on completion of the extended water permit, to either procuring water from a third party or using raw sea water. The ore reserves estimate assumes that the requested permits will be extended to allow for the extraction of all of Zaldivar's ore reserves. The details of the future permits or alternative water supply arrangements could lead to a review of and, eventually, an update to, Zaldivar's mine plan. #### o) Antonin 2 and Antonin Investors The Group has a 51% interest in two indirect subsidiaries, Antonin 2 Limited ("Antonin 2') and Antonin Investors Limited ("Antonin 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 Antonin 2 and Antonin 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 34(C) to the financial statements. Antofagasta plc Annual Report 2022 255 Other Information ## Glossary and definitions ADS Asset Delivery System. Concentrate The product of a physical concentration process, such as flotation or gravity AMSA Antofagasta Minerals SA, a wholly-owned concentration, which involves separating subsidiary of the Group incorporated in Chile, ore minerals from unwanted waste rock. which acts as the corporate centre for the Concentrates require subsequent processing Mining division. (such as smelting or leaching) to break down Annual Report The Annual Report and Financial Statements or dissolve the ore minerals and obtain the of Antofagasta plc. desired elements, usually metals. Antucoya Minera Antucoya, a 70%-owned subsidiary Contained copper The proportion or quantity of copper contained incorporated in Chile. in a given quantity of ore or concentrate. Banco de Chile A commercial bank that is a subsidiary Continental Water that comes from the interior of land of Quiñenco. water masses including rain, snow, streams, rivers, Barrick Gold Barrick Gold Corporation, incorporated lakes and groundwater. in Canada and our joint venture partner Copper cathode Refined copper produced by electrolytic in Zaldívar. refining of impure copper by electrowinning. | Brownfield | A development or exploration project in the | | | | --- | --- | --- | --- | | | | Corporate | The UK Corporate Governance Code is a set | | project | vicinity of an existing operation. | | | | | | Governance | of principles of good corporate governance, | | By-products | Products obtained as a result of copper | Code | most of which have their own more detailed | | (credits in | processing. Los Pelambres and Centinela | | provisions published by the Financial Reporting | | copper | Concentrates receive credit for the gold and | | Council, most recently updated in 2018. | | concentrates) | silver content in the copper concentrate sold. | | | Cut-off grade The lowest grade of mineralised material Los Pelambres and Centinela also produce considered economic to process and used molybdenum concentrate. in the calculation of ore reserves and mineral Capex Capital expenditure. resources. Cash costs A measure of the cost of operating production Directors The Directors of the Company. expressed in terms of US dollars per pound EBITDA Earnings Before Interest, Tax, Depreciation of payable copper produced. Cash costs are and Amortisation. stated net of by-product credits and include EIA Environmental Impact Assessment. treatment and refining charges for concentrates for Los Pelambres and Centinela. Encuentro Copper oxide and sulphide deposit in the Cash costs exclude depreciation, financial Centinela Mining District. income and expenses, hedging gains and EPS Earnings per share. losses, exchange gains and losses, and Esperanza Sur Copper deposit in the Centinela Mining District. corporation tax. FCAB Ferrocarril de Antofagasta a Bolivia, the CDP Carbon Disclosure Project. corporate name of our Transport division. Centinela Minera Centinela SA, a 70%-owned subsidiary Flotation A process of separation by which chemicals in incorporated in Chile that holds the Centinela solution are added to finely crushed materials, Concentrates and Centinela Cathodes some of which are attracted to bubbles and operations. float, while others sink, which results in the Centinela Mining Copper district located in the Antofagasta production of concentrate. District region of Chile, where Centinela is located. FTSE All-Share A market-capitalisation weighted index Chilean peso Chilean currency. Index representing the performance of all eligible CO e Carbon dioxide equivalent. companies listed on the London Stock 2 Exchange’s main market. Companies Act Principal legislation for United Kingdom 2006 Company law. Company Antofagasta plc. Antofagasta plc Annual Report 2022256 | FTSE100 and | A share index of the 100 or 350 companies | Mineral | Material of intrinsic economic interest | | --- | --- | --- | --- | | FTSE350 Index | listed on the London Stock Exchange with the | resources | occurring in such form and quantity that | | | highest market capitalisation. | | there are reasonable prospects for eventual | economic extraction. Mineral resources GAAP Generally Accepted Accounting Practice or are stated inclusive of ore reserves, as defined Generally Accepted Accounting Principles, by JORC. a collection of commonly-followed accounting rules and standards for financial reporting. Net cash cost Gross cash costs less by-product credits. GHG Greenhouse Gas. Open pit Mine working or excavation that is open to the surface. Government The Government of the Republic of Chile. Ore Rock from which metal(s) or mineral(s) can Grade A copper Highest-quality copper cathode, 99.99% pure. be economically and legally extracted. cathode Ore grade The relative quantity, or percentage, of Greenfield The development or exploration of a new metal content in an ore body or quantity project project at a previously undeveloped site. of processed ore. Group Antofagasta plc and its subsidiary companies Ore reserves Part of mineral resources for which appropriate and share of joint ventures. assessments have been carried out to Heap-leaching A process for the recovery of copper from ore, demonstrate that at a given date extraction or leaching generally oxides. The crushed material is laid could be reasonably justified. These include on a slightly sloping, impermeable pad and consideration of and modification by realistically leached by uniformly trickling a (gravity fed) assumed mining, metallurgical, economic, chemical solution through the heaps to marketing, legal, environmental, social and collection ponds. The metal is then recovered governmental factors. from the solution through the SX-EW process. Oxide and Different kinds of ore containing copper. HPI High Potential Incident. An event that, under sulphide ores Oxide ore occurs on the weathered surface different circumstances, might easily have of ore-rich lodes and normally results in resulted in a serious injury or fatality. the production of cathode copper through ICMM International Council on Mining and Metals. a heap-leaching process. Sulphide ore is an IFRIC International Financial Reporting Standards unweathered parent ore normally treated using Interpretations Committee. a flotation process to produce concentrate which then requires smelting and refining IFRS International Financial Reporting Standards. to produce copper cathodes. JORC The Australasian Joint Ore Reserves Payable copper The proportion or quantity of contained Committee. copper for which payment is received KPI Key performance indicator. after metallurgical deduction. Life-of-Mine The remaining life of a mine expressed Platts A provider of energy and metals information (“LOM”) in years, calculated by reference to scheduled and source of benchmark price assessments. production rates (ie comparing the rate at Porphyry A large body of rock which contains which ore is expected to be extracted from disseminated chalcopyrite and other sulphide the mine to current ore reserves). minerals. Such a deposit is mined in bulk on LME London Metal Exchange. a large scale, generally in open pits, for copper Los Pelambres Minera Los Pelambres, a 60%-owned and its by-products. 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. Antofagasta plc Annual Report 2022 257 Other Information / Glossary and definitions continued Provisional A sales term in several copper and Tailings dam or Construction used to deposit the rock waste pricing molybdenum concentrate sale agreements tailings storage which remains as a result of the concentrating and cathodes sale agreements that provides facility (TSF) process after the recoverable minerals have for provisional pricing of sales at the time of been extracted in concentrate form. shipment, with final pricing being based on the TC/RCs Treatment and refining charges, being terms monthly average LME copper price or monthly used to set the smelting and refining charge or average molybdenum price for specific future margin for processing copper concentrate and periods, normally ranging from 30 to 180 normally set on either an annual or spot basis. days after delivery to the customer. TCFD Task Force on Climate-related Financial Quiñenco Quiñenco SA, a Chilean financial and industrial Disclosures. group listed on the Santiago Stock Exchange Tonne Metric tonne. and controlled by a foundation in which members of the Luksic family are interested. TSR Total Shareholder Return, being the movement in the Company’s share price plus any RCA Resolución de Calificación Ambiental, dividends paid by the Company. Environmental Approval Resolution. Twin Metals A copper, nickel and platinum group metals Realised prices Effective sale price achieved comparing Minnesota underground-mining project located in revenues (grossed up for treatment and Project Minnesota, US. refining charges for concentrate) with sales volumes. UK United Kingdom. Reko Diq A copper-gold deposit in Pakistan, previously Underground Natural or man-made excavation under a subsidiary of Tethyan. mine the surface of the ground. Run-of-Mine A process for the recovery of copper from ore, US United States. (“ROM”) typically used for low-grade ores. The mined, US dollar United States currency. uncrushed ore is leached with a chemical Zaldívar Compañía Minera Zaldívar SpA is a 50-50 joint solution. The metal is then recovered from venture with Barrick Gold and is operated by the solution through the SX-EW process. the Company. 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. 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. Antofagasta plc Annual Report 2022258 # Shareholder information ## 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 | Gigaliitre | | 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 168, and in Note 13 to the Financial Statements. If approved at the Annual General Meeting, the final dividend of 50.5 cents per share will be paid on 12 May 2023 to ordinary shareholders that are on the register at the close of business on 21 April 2023. Shareholders can elect (on or before 24 April 2023) 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 27 April 2023. 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 a hybrid meeting at Church House Westminster, Dean's Yard, London SW1P 3NZ and electronically by live broadcast using the Summit platform (meetnow.global/AFGAGM2023) at 2:00 pm on Wednesday 10 May 2023. 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 30 to the Financial Statements. Antofagasta plc Annual Report 2022 259 / Shareholder information continued ### Shareholder calendar 2023 Registrars Computershare Investor Services PLC 18 January 2023 Q4 2022 Production Report The Pavilions 21 February 2023 Full Year 2022 Results Announcement Bridgwater Road 19 April 2023 Q1 2023 Production Report Bristol BS99 6ZY 20 April 2023 2022 Final Dividend – Ex Dividend date United Kingdom 21 April 2023 2022 Final Dividend – Record date Tel: +44 370 702 0159 24 April 2023 2022 Final Dividend – Final date for receipt www.computershare.com of Currency Elections Website 27 April 2023 2022 Final Dividend – Pound sterling/ www.antofagasta.co.uk Euro Rate set Registered office 10 May 2023 Annual General Meeting 103 Mount Street 12 May 2023 2022 Final Dividend – Payment date London 19 July 2023 Q2 2023 Production Report W1K 2TJ United Kingdom 10 August 2023 Half Year 2023 Results Announcement Tel: +44 20 7808 0988 31 August 2023 2023 Interim Dividend – Ex Dividend date Santiago office 01 September 2023 2023 Interim Dividend – Record date Antofagasta Minerals SA 04 September 2023 2023 Interim Dividend – Final date Av. Apoquindo 4001 – Piso 18 for receipt of Currency Elections Las Condes | 07 September 2023 2023 Interim Dividend – Pound sterling/ | | Santiago | | --- | --- | --- | | | Euro Rate set | Chile | | 29 September 2023 2023 Interim Dividend – Payment date | | Tel: +56 2 2798 7000 | | 18 October 2023 Q3 2023 Production Report | | Registered number | | 17 January 2024 Q4 2023 Production Report | | 1627889 | Dates are provisional and subject to change. Designed and produced by Black Sun Plc www.blacksunplc.com The photography in this report was primarily supplied by Roberto Candia. This report is printed on paper certified in accordance with ® ® the FSC (Forest Stewardship Council ) and is recyclable and acid-free. Pureprint Ltd is FSC certified and ISO 14001 certified showing that it is committed to all round excellence and improving environmental performance is an important part of this strategy. Pureprint Ltd aims to reduce at source the effect its operations have on the environment and is committed to continual improvement, prevention of pollution and compliance with any legislation or industry standards. ® Pureprint Ltd is a Carbon / Neutral Printing Company. ANTOFAGASTA PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2022 Antofagasta plc 103 Mount Street London W1K 2TJ United Kingdom antofagasta.co.uk