codelco financial results january-june 2013 · 2013-09-03 · codelco financial results...

Codelco Financial Results

January-June 2013

Thomas Keller L. Codelco CEO

Iván Arriagada H. Administration & Finance Vice-President

Press Conference 30 August 2013

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2013

Accident Rate January-June 2013

Accident Frequency Rate - Staff & Contractors (Lost Time Incidents / Million hours worked)

8

12

Staff & Contractor Fatalities

(Fatal Accidents)

7

10 6

5

4

3

2

8 6 4 2

1 0

0

.

· During the first half of 2013, January – June – we had to regret 3 fatal accidents.

· We continue to make progress in implementing the Occupational Health and Safety Growth Project (PESSO),

to once and for all eliminate fatalities and thus be consistent with Codelco’s first core value:

Respect for Life and Dignity

Copyrights © 2013 CODELCO-CHILE. Todos los Derechos Reservados. | Copyrights © 2013 by CODELCO-CHILE. All Rights Reserved.

Press Conference | 30 August 2013

2

Copper Production (kMt) 1st Half Year 2012-2013

800

Total Output 700

600

500

400

300

200

100

0

2013: 758+85 = 843,000 Mt

2012: 767+36 = 803,000 Mt

Chuqui R. Tomic Gaby Salvador Andina El Teniente Codelco El Abra (*) Anglo

2013

2012

140

154

204

204

67

66

22

27

116

121

209

194

758

767

39

36

American (*) 46

0

(*) Output reflects Codelco’s stake



3

Key Events January-June 2013

New Codelco Division: On 1st January Minera Gaby subsidiary officially became Gabriela Mistral Division.

Employee Strike: There was a 7-day strike at Radomiro Tomic Division at the end of March; on 9 April another 24-hour strike hit all Codelco operations

Port Strike: Port workers went on a 20-day strike, of which 15 days were in March, delaying shipments of 60,000 tons of copper.

Corporate Governance: A Shareholders’ Meeting was held in April, the Ministers of Finance and Mining were also at the meeting, and together with the Board of Directors, the 2012 financial statements, annual report and balance sheet were reviewed.

In May, President Sebastián Piñera appointed Blas Tomic Errázuriz as a new Codelco Director and reappointed Gerardo Jofré Miranda for a new

period; he was also ratified as Chairman of the Board. Both directors have been appointed for a 4-year period until May 2017.

In April new managers assumed positions at three North District divisions: Juan Medel, General Manager at Radomiro Tomic; Claudio Olguín, General

Manager at Ministro Hales, and Óscar Jiménez, General Manager at Gabriela Mistral.

· Investments & Projects: Progress of structural growth projects as at 30 June:

Ministro Hales: completing implementation stage, which consists of pre-stripping, building and start-up of mine facilities; physical progress is 95.1 % New El Teniente Mine Level: in implementation stage (12.8 % progress), construction of main tunnels, ventilation adits, development of mine interior

and roads. Chuquicamata Underground Mine: completing construction of early works (52.8 % progress). Andina Expansion 244: currently processing its Environmental Impact Study, preparing answers to requirements set by the authorities and

community at ICSARA. RT Sulphide Expansion: currently processing its Environmental Impact Study, submitted on 31 May to the Environmental Assessment Service of

the II Regions of Antofagasta. Copyrights © 2013 CODELCO-CHILE. Todos los Derechos Reservados. | Copyrights © 2013 by CODELCO-CHILE. All Rights Reserved.


4

Key Events January-June 2013

· Human Resources: Codelco has increased number of women hired; in June female staff represented 8.5% of total workforce (1,657 employees). · Energy: In February Luz Minera gas plant started it environmental assessment, project implemented in Mejillones. It will now be available to energy

generation companies that take part in the tender process, that Codelco decided to implement to meet the energy requirements of its different projects. · In March, Codelco successfully completed its ERNC Credit Tender Process for the period 2013-2017, fully complying with the ERNC legal

requirements. The contracts were awarded to Norvind and Arauco. · In April, Codelco and GNL Mejillones agreed on a contract to use the Natural Liquefied Gas Regasification Terminal at Mejillones.

· New uses for copper: In March, Codelco and Arauco launched a new product that uses the antimicrobial properties of copper: Vesto melamine. Also during this period, the Intensive Care Unit at Roberto del Río Children’s Hospital in Santiago, which has 6 rooms and 2 ICU rooms, was equipped with copper touch surfaces to reduce intrahospital infections.

· Sustainability & CSR: In May, Codelco published its Sustainable Development Report 2012. · Codelco received the Sello Pro Pyme award, given by the Ministry of Economy to companies that have committed to pay its SME suppliers within

thirty days. Codelco has more than 9.500 suppliers, 43% are small-sized enterprises. · Codelco promoted a new Children’s Symphony Orchestra in the city of Diego de Almagro. This initiative is similar to those implemented in Los

Andes, Mejillones and Til Til . · Original Peoples’ Day: In June the Book Ritualidad Andina Alto was launched at Toconce and Estación San Pedro. This book compiles photographs of

the different traditions of the Andean peoples in the province.



5

Performance January-June Output and Price Data

2013

2012

Own Copper Output including El Abra & Anglo – (1,000 metric tons)

Own Copper Output (1,000 metric tons)

Molybdenum Output (1,000 metric tons) Acid Surplus Output (1,000 metric tons) Silver Output( *) - ton Gold Output (*) - ton

Copper Sales (**) - (1,000 refined metric tons) Own Copper Third-party copper

Molybdenum Sales (1,000 metric tons)

LME copper prices (cl/lb) Metals Week molybdenum prices (US$/kg) Sulphuric acid prices (US$/ton) Gold prices (US$/oz) Silver prices (US$/oz) Exchange Rate CPI

843

758

11,3 1,245

128

1.1

837 777

60

11 342.0

24.5

91

1,523

26.6

479

109.0

803

767

9,5 1,571

150

1.2

813 732

81

10 367.3

31.0

147

1,651

30.8

493

107.6

(*) Gold and silver contained in anode slimes, concentrates, anodes and blister (**) Includes third-party mineral ore



6

Jan

-12

Jan-

13

Sep-

12

Jun-

12

Oct

-12

Mar

-12

Aug-

12

Mar

-13

Feb-

12

A pr-

12

Feb-

13

May

-12

Nov

-12

Apr-

13

May

-13

Jun-

13

Jul-1

2

Dec

-12

Copper Price Chart (c/lb) 2012-2013

390

380

370

360

350

367.3 342.0

340

330

320

310

300



7

Jan

-12

Jan

-13

Jun-

13

May

-13

Apr-

13

Mar

-13

Feb-

13

Dec

-12

Nov

-12

Oct

-12

Sep-

12

Aug-

12

Jul-1

2

Jun-

12

May

-12

A pr-

12

Mar

-12

Feb-

12

Molybdenum Price Chart (US$/Kg) 2012-2013

34

32 30.8

30

28

26

24.5

24

22

20



8


Copper Output



9

Production (Ktmf) By Division 1st half year 2013

2013

2012

Var

%

Total Copper Output

Chuquicamata Radomiro Tomic

Gaby

Salvador

Andina

Teniente

Own Copper Output

El Abra (*)

Anglo American (*)

Attributable Copper Output

843 140 204

67

22

116

209 758

39

46

84

803 154 204

66

27

121

194 767

36 -

36

39 -14.19

-0.41

1.16

-4.40

-5.54

14.71

-9

2

46

48

4.9%

-9% 0%

2%

-17%

-5%

8%

-1.1%

6% 132,3%

(*) Proportion of output related to Codelco’s stake



10


Costs



11

Direct Costs January-June 2013 vs. average 2012 (US c/lb of copper)

2013

2012

Var (%)

Total costs & expenses

TC/RC costs

By-product credit

Net Cathode Cost (C3)

Depreciation % amortization

Financial Expenses

Total non-operating expenses

Corporate Office expenses

Cost C1

236.3

6.3 -22.7 219.9 -45.6

-8.8

9.6

-3.9 171.2

264.5

4.8 -27.7 241.7 -41.5

-9.1 -23.0

-4.5 163.5

-11% -9% 5%



12

C1 Cost –Half Year Graph (c/lb)

190.0

180.0

170.0

160.0

150.0

140.0

130.0

120.0

110.0

100.0

177.3 2nd 2012

171.2 1st 2013

C1 Average 2012: 163,5



13

Total C1 Cost Variance Analysis (US c/lb of copper)

C1 cost 2012

Effect of CPI, Exchange Rate & US PPI

Lower by-product credit

Lower electricity prices

Lower services & input prices

Subtotal

Lower third-party services

Lower input costs

Copper mine variables

Processing & other costs

Salaries, benefits, & others

Subtotal

C1 Cost January - June 2013

Difference

163.5

3.6

6.5

-1.0

-1.8

7.3

-1.8

-0.8

1.5

1.4

0.1

0.4 171.2

7.7



14

Productivity and Cost Improvements Examples 1st Half Year 2013

Performance Optimisation

Cost Optimisation of third-party services

Optimisation of inputs and materials

Reduction of consulting & support services

Molybdenum recovery rose from 60% to 65.8%. More mineral ore extracted from underground and open-pit mine Increased productivity and contract consolidation Optimisation of critical input use: · Reduced use of sulphuric acid · Reduced use of explosives · Increase performance of tyres Optimisation of activities and internal processes, simplification of activities

Rise in molybdenum production in 2Q at El Teniente Division

More copper output at El

Teniente Division

More than 170 contracts Negotiated at Divisions in 2Q

Input costs reduced and did not impact output

Optimised services & consultancies; US$ 10 million saved in first quarter



15


Pre-tax Profits and Earnings



16

Income Statement 1st Half Year 2013 (US$ millions)

2013

2012

Copper sales revenue Copper sales cost

Gross profit – copper sales

Gross profit – by-product & other product sales

GROSS PROFIT

Non-operating income

PRE-TAX PROFIT

COMPARABLE PROFIT (*)

5.846

-4.176 1.670

206 1.876

-70 1.806

1.398

6.070

-3.575 2.495

354 2.849

-333 2.516

1.972

(*)Equivalent to Codelco’s profit applying the same tax requirements as private-sector companies



17

Pre-tax Profit by Division 1st Half Year 2013 (US$ millions)

1000

800

600

400

200

0

-200

Chuquica-

mata

R. Tomic

G. Mistral

M. Hales

Salvador

Andina

El Teniente Ventanas

Subsidiaries & Head Office

Excedente 108 776 102 5 -65 272 533 -59 134



18

Pre-Tax Profit Distribution 1st Half Year 2013 (US$ millions)

2013

2012

Reserve Tax Law No.13.196

Income Tax

Specific Mining Tax

Profit

TOTAL PRE-TAX PROFIT

COMPARABLE PROFIT(*)

590

637

66

513 1.806 1.398

615 1.016

128

757 2.516 1.972

(*) Equivalent to Codelco’s profit applying the same tax requirements as private-sector companies.



19


January-June 2013

Thomas Keller L. CEO

Iván Arriagada H. Administration & Finance Vice-President

Press Conference 30 de August 2013

codelco financial results january-june 2013 · 2013-09-03 · codelco financial results...

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