CHAIRMAN’S COMMENTS AT THE 2023 AGM
NEWS RELEASE, 10 MAY 2023
CHAIRMAN'S COMMENTS AT THE 2023 ANNUAL GENERAL MEETING
Antofagasta plc (the "Company") today released the script to be used by the Chairman, Jean-Paul Luksic at the Company's Annual General Meeting that commences at 2:00 pm today.
Good afternoon, ladies and gentlemen.
Welcome to Antofagasta plc's 2023 Annual General Meeting.
It is a pleasure to be here in London to meet with our shareholders. Thank you for joining us today, be it either in person or virtually, and I confirm that we have a quorum present.
The majority of our Directors are here in person today. You will see that our CEO, Iván Arriagada, is also here along with several senior members of our executive team who are available to answer any questions that you may have if they aren't covered in the meeting. Photos and short biographies of each of our Directors, including their Board and Committee roles, are set out on pages 13 to 18 of the Notice of Meeting.
There is an important update since we published the Notice of Meeting - the Board has appointed an additional independent non-executive director and member of the Company's Audit and Risk Committee. Please welcome Heather Lawrence to your Board.
Heather has significant experience as a UK non-executive director. She is currently a non-executive director and Chair of the audit committee of Melrose Industries plc. Previously, she was a non-executive director of Coats Group plc, and a non-executive director and Chair of the audit committee of FlyBe Group plc.
Now, I would like to give you a brief overview of the strategy and performance of your company and make some comments on the macro environment in which we are operating. Iván Arriagada will make a short presentation about our performance in 2022 and then we will move onto the formal part of the meeting. After that I will open the floor for questions.
Let me start by saying a few words about how we operate.
I want to take this opportunity to acknowledge the efforts taken by everyone in the company that resulted in a record safety performance during 2022. Not only were we fatality free, but we also lowered the number of high potential incidents and lost time injury frequency rate to record lows. This achievement requires vigilance and discipline from everyone at our operations - from the leadership team to every employee and contractor.
As a Board, we acknowledge these achievements, and the commitment to operating responsibly and reliably.
Although there were challenges in the operating environment over the course of last year, production increased quarter on quarter in line with our plans, with a strong finish to the year. Copper production for the year totalled 646,000 tonnes, representing a level below 2021 primarily because of limitations on availability of water at Los Pelambres. Net cash costs were 1.61 cents per pound, reflecting lower production and the impact of higher inflation. Alongside these results, financial performance for the company remained strong, with revenues of $5.9 billion and EBITDA of $2.9 billion.
The Board has proposed that the total dividend should be $588 million, the full net earnings for the year. If approved by shareholders today, the final dividend of 50.5 cents per share will be paid to shareholders on the 12th of May.
Ongoing challenges such as the drought in Central Chile highlight the importance of planned investments. Our continuing engagement with local communities and decisions that we have taken over the years have helped us to become a more resilient business. The new desalination plant and related water system at Los Pelambres is expected to start production during the second quarter of this year, after completing commissioning. Together with the start-up of this project, we also expect to finalise the permitting to commence the expansion of the desalination plant to double its original capacity. Once this expansion is completed, over 95% of Los Pelambres' water will be either sea or recirculated water.
During 2022, public and private sector decisions to accelerate the transition to a low-carbon economy continued to gather strength. The United States passed the Inflation Reduction Act 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 that are integral to a net-zero world. In November 2022, COP27 took place in Egypt, drawing further attention and commitments from governments to a net-zero future.
In the case of your Company, we are committed to provide the copper that is required for a low carbon economy, and to continue to transform how copper is produced to achieve the highest sustainability standards. No less important than the metal itself is how we produce it. We view our responsibility as operating sustainably, reliably and with respect for local communities and the environment, living up to our Purpose of 'Developing Mining for a Better Future'.
Lowering emissions and reducing continental water use remain two key strategic priorities, for which we have board-level focus, and company-wide initiatives.
By 2025 we expect that 90% of the Group's water usage will either be from the sea or recirculated water.
By the end of 2022, we exceeded our carbon emissions reduction target, three years ahead of the originally planned date.
As a result, we are now in the process of defining new emission reduction targets that will help us to achieve our goal of being carbon neutral by 2050.
In April 2022, the last of our mining operations moved to 100% contracted renewable energy, a transformation we committed to pursue several years ago and which is now fully implemented.
Also, I am proud to share that starting from 2022, all our mining operations have received The Copper Mark, which is an independently verified responsible production accreditation standard.
Environmental and social performance is critical to the long-term success of our business and the global mining industry. Therefore, I am pleased to report to you that your company is taking a leading role in these key areas.
Allow me to say a few words about our future and plans for growth.
We have several embedded organic growth options within our portfolio, which stem from our sizeable mineral resources base. We also have the capability to unlock further growth that will allow us to continue to develop and grow our production into the future.
At the grassroots level, we have several exploration projects that are in different phases of evaluation, which will generate organic growth for the Company. During 2022, we increased our mineral resources by over 900 million tonnes of copper ore, with over half of this increase coming from two recent exploration discoveries in Chile.
In addition, we have the potential to continue to grow our existing operations.
In the case of Los Pelambres, the current expansion is nearing completion, with progress reaching over 96%, and we expect to start the desalination and concentrator plants this year.
At Centinela, progress continues with the engineering and pre-investment studies for the Second Concentrator project, which has a projected investment of close to $ 4 billion and has the capacity to increase our copper production by 140 thousand tonnes annually, while also significantly increasing the current production of gold and molybdenum.
We expect to have a final investment decision on whether to proceed with this project during the second half of the year, once there is clarity on the Royalty taxation changes in Chile and progress on the new Constitution.
In summary, as you can see, our large mineral resource base gives us options to develop our production at a time when copper supply is becoming increasingly constrained.
Now, I would like to say a few words about your Board, including our commitment to diversity and inclusion.
In 2022, our entire board met in person for the first time since early 2020 due to the pandemic. The directors also made site visits to at least one of our operations, including projects under construction.
As explained in the Notice of Meeting and our Annual Report, Vivianne Blanlot has served on our Board for more than nine years. She has therefore stepped down from the Nomination and Governance Committee and Remuneration and Talent Management Committee. Vivianne has agreed to continue serving as a Director, Chair of our Sustainability and Stakeholder Management Committee, and member of the Projects Committee.
Francisca Castro also joined the Nomination and Governance Committee and Eugenia Parot joined the Remuneration and Talent Management Committee.
I am very proud to say that today 36% of our directors are women. With the recent appointment of Heather Lawrence, more than half of our Board appointments since 2014 have been women. We continue to aim to increase female representation on our Board and we are actively working towards meeting the 40% target.
At its core, Antofagasta plc is a long-term business. Our mines operate on decades-long timelines, and our governance structures are designed to help us achieve long-term sustainable success.
Now, I would like to briefly address the political situation in Chile.
In a September referendum, the country rejected a proposed draft for a new Constitution, reflecting support for a more moderate approach going forward. A new Constitution will be drafted this year, with a new referendum scheduled for December. My hope is that this new Constitution will unite Chileans and provide the clarity and stability that will help attract investments to Chile and all the opportunities that flow from them.
Mining is a capital-intensive industry with long-term commitments and risks, from discovery to production and closure. Therefore, it is especially important for the future development of the industry, that the new constitution includes a framework for mining concessions that will provide the required long-term certainty and predictability for investment.
After a long period of discussion between Congress, government and industry, the proposed mining royalty bill is now with the Senate before moving to the lower house. We remain concerned by the impact that these proposed changes will have on the competitiveness of the industry in the long term.
Our focus remains on ensuring that Chile's mining industry, which accounts for more than 10% of the country's GDP, remains globally competitive and will continue to further Chile's economic and social development.
Let me finish with a few comments on the outlook for 2023.
Uncertainty clouds the short-term picture, yet important features of the long-term are clearer. The world is moving towards net-zero. That journey will demand more copper, and according to some forecasters this could even be as high as 6 to 7 million additional tonnes over the next decade alone. All this at a time when the global copper supply is constrained by declining resource quality and long lead times for project development and permitting. Our focus remains on being a leading, responsible and reliable producer of copper that the low-carbon world requires.
The International Monetary Fund forecasts that global growth will slow in 2023 affected by several issues, particularly the war in Ukraine, the strength and pace of China's recovery, the slowdown of economic growth in the US and Europe, and the energy crisis.
Against this backdrop, at Antofagasta we have been working hard over the last few years in several transformations including in the areas of safety, energy and water supply. We have also focussed on innovation and cultural change and in developing our future options through advancing our projects. This makes us more resilient and better prepared for the challenges ahead.
We know that in any environment, the diversity, safety, and health of our people matter. So does the strength of our culture and the discipline with which we operate and manage costs. Such steps not only strengthen the core of our business but position us so that 2023 is not defined by the challenges we face, but by our responses to them.
Finally, I would like to express my special thanks to all our people, employees and contractors who have contributed to the continued success of your Company.
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Investors - London |
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Media - London |
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Rosario Orchard |
rorchard@antofagasta.co.uk |
Carole Cable |
antofagasta@brunswickgroup.com |
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Telephone |
+44 20 7808 0988 |
Telephone |
+44 20 7404 5959 |
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Robert Simmons |
rsimmons@antofagasta.co.uk |
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Telephone |
+44 20 7808 0988 |
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Media - Santiago |
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Pablo Orozco |
porozco@aminerals.cl |
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Carolina Pica |
cpica@aminerals.cl |
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Telephone |
+56 2 2798 7000 |
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