enaex s.a. 2019 annual reportit is my pleasure to present, on behalf of the board of directors of...
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ENAEX S.A.2019 ANNUAL REPORTI N T E G R A T E D R E P O R T
The Integrated Report is written in accordance with International Integrated Reporting Council (IIRC) methodology. This fifth version once again aims to provide a broader view of its business model so that its shareholders and main stakeholders may understand how the Company seeks to meet the challenges of sustainable growth in a competitive global environment and create value in the long term. This report discloses increasingly better data on how sustainability challenges have been transformed into opportunities for innovation and growth—for the Company, its suppliers and its customers. Our new corporate vision focuses on thinking big. We continue to make progress on the ambitious commitments that define Enaex's current and future roles with services that offer comprehensive solutions while developing a business that adapts to industry changes quickly and efficiently.
A publicly traded corporation in accordance with Law No. 18,046,
CMF Securities Registry No. 0401. (Formerly Superintendency of
Securities and Insurance, SVS).
Corporate Name : Enaex S.A.
Doing Business As : Enaex
Chilean Tax ID : 90.266.000-3
Type of Entity : Public Traded Corporation
Securities Registration : SVS Registry No. 0401
Headquarters : El Trovador 4253 5th floor, Las Condes, Santiago
Phone : +56 22837 7600
E-mail : [email protected]
Website : www.enaex.com
SCOPE OF THE INTEGRATED REPORT
This integrated report includes
consolidated information on the
Company's financial, social and
environmental performance for the
period between January 1 and
December 31, 2019
1. CORPORATEINFORMATION
A Word from Our ChairmanMission and VisionThe CompanySummary of Consolidated Financial ResultsCompany HistoryCorporate GovernanceCorporate Governance PracticesOwnership StructureCorporate ValuesPolicy on Sustainability, Diversity and InclusivenessStakeholdersEnaex Materiality
689
101214161819202122
2. STRATEGY
Business ModelProducts and ServicesBlasting ServicesProduction PlantsInnovation and DevelopmentKey PartnersOpportunities and Risk FactorsFinancial Policy
2627293034383941
3. BUSINESSAREAS
44 Corporate Development Plans47 Mining Industry47 Explosives Market
4. SOCIALPERFORMANCE
Human Resource ManagementHSEC Risk ManagementCommunity Management
505455
5. ENVIRONMENTALMANAGEMENT ANDECO-EFFICIENCY
Corporate Carbon FootprintEnergy Consumption
6061
CORPORATE INFORMATION1.
Corporate Governance PracticesOwnership StructureCorporate ValuesPolicy on Sustainability, Diversity and InclusivenessStakeholdersEnaex Materiality
161819202122
A Word from Our ChairmanMission and VisionThe CompanySummary of Consolidated Financial ResultsCompany HistoryCorporate Governance
689
101214
Dear Shareholders:
It is my pleasure to present, on behalf of the Board of Directors of Enaex S.A., the 2019 Integrated Report and Consolidated Financial Statements. This Integrated Report once again includes significant facets from all areas of our operations. It is written in accordance with the International Integrated Reporting Council (IIRC) framework, a model which aims to provide a more thorough, precise and comprehensive representation of how our Company's resources create value.
Enaex and its board of directors have an ongoing interest in projects and activities that enable the Company to project itself in an innovative, sustainable manner while achieving our best economic performance. This year, we focused on strengthening our role as an integrated rock fragmentation services provider by offering high-value solutions and an approach that emphasizes customer needs. We continue developing cutting-edge products and solutions for global mining with programs that address some of the aspects most relevant to the organization: human resource management, safety, synergy between subsidiaries, digital transformation, robotics, emissions control and energy efficiency.
In the four years since we acquired Enaex Britanite, Brazil’s largest explosives company, and France's Davey Bickford Enaex group, one of the world's leading manufacturers and distributors of electronic detonators for the explosives industry, we have certainly met the goal of constantly improving our value proposition for customers. We have done so while strengthening our global position by adding more secure logistics and supply processes to our offer of cutting-edge initiation systems and technology. Consequently, Enaex Britanite was recognized for the best performance in Safety at the SEST 2019 event, which gathers together Brazil’s contractors and product and service suppliers with the best practices in safety and sustainability. Davey Bickford Enaex received the Health and Safety award from France Chimie, a professional organization that supports and brings together the French chemical industry. This accolade is given to companies that are noteworthy and innovative in health, safety, environmental and social matters.
A WORD FROM OUR CHAIRMAN6
In keeping with the strategic plan’s objective of maximizing the Company’s development in the world’s leading mining regions, Sasol South Africa Limited selected Enaex as a preferred strategic partner with whom to negotiate terms and conditions for a joint venture with its Johannesburg, South Africa-based subsidiary engaged in the explosives and rock fragmentation industry.
At the global level, the mining sector has faced problems that require timely solutions and thinking outside the box. Joint innovation efforts involving mining companies and their suppliers have become fundamental to the industry's sustainability. Consequently, the Digital Transformation Division was created in 2019. It aims to address industry challenges in the face of the fourth industrial revolution and sees the use of technology as a means of adding value for our customers.
In innovation, we achieved a historic milestone with the world’s first 100% teleoperated on-site blasting tests and won our first contract to operate and implement teleoperated loading services. That is why we are proud to have earned first place on the Most Innovative Companies Chile 2019 Ranking, announced in October, in the category of most advanced in the mining services sector.
In the environmental realm, Enaex continued projects associated with the Clean Development Mechanism (CDM) efforts, which began in 2006, to reduce nitrous oxide emissions at the Prillex America complex in Mejillones. Energy efficiency projects were also implemented and have translated into significant energy savings. The Company has the capacity to cogenerate nearly 60% of its electricity consumption, reducing annual CO2 equivalent emissions by approximately 34,000 tons. This and other progress earned the Company, for the fourth straight year, a position on the Dow Jones Sustainability Index Chile (DJSI Chile) developed by Santiago Exchange, S&P Dow Jones Indices and RobecoSAM.
As of December 2019, Enaex reported US$766.5 million in revenue and US$81.7 million in profit, representing a 2% drop and a 4% increase, respectively, relative to the prior year. Sales volumes in Chile, Brazil and Peru remained high thanks to higher mining sector growth. On the international markets, exports reached 212,000 tons with Bolivia, Peru and Australia as the main final destinations.
In closing, I would like to express special gratitude to our employees in all the countries where we operate: Chile, Argentina, Australia, Brazil, Canada, Colombia, the United States, France, Mexico and Peru. Their efforts and dedication are what has earned us a leadership position in production, quality, sustainability and innovation. I would also like to thank our customers, suppliers, financial institutions, investment funds and bondholders. They have accompanied us throughout the years on all the challenges and goals we have set for ourselves. Likewise, I am grateful to the shareholders who have placed their trust in us, to Sasol South Africa Limited for choosing us as a strategic partner and to the directors who have contributed to this endeavor.
Juan Eduardo Errázuriz O.Chairman
COMPANY AT A GLANCE
VISION
To be the mining industry's most prestigious
company, delivering first-class blasting solutions
to the world's most important mining regions.
MISSION
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To grow along with customers, supplying high-quality ammonium nitrate, related chemicals and mining services.
To provide world-class safety standards, reliability and innovative services.
To establish a global presence and leadership in Latin America.
To generate value for shareholders and employees.
To be recognized as a company that is respectful of the community and the environment.
The Company has contracts with a large portfolio of important customers, including the region's main open-pit and underground mines. It provides rock fragmentation and blasting services in Chile, Argentina, Brazil, Colombia and Peru, where it also has a broad network of on-site service plants. These plants provide a variety of services, such as: shot blasting, loading blasting agents, shallow mooring, plugging blast holes, checking blasting holes, and magazine management.
The Company stands out for its steady growth throughout Latin America. In Colombia, through its subsidiary Enaex Colombia S.A.S., it has a high-tech packaged emulsions plant in operation since 2010. In Argentina, the Company's subsidiary Enaex Argentina SRL has a bulk emulsions plant in operation since 2014. In Brazil, the Company acquired a 100% interest in IBQ Industrias Químicas (Britanite), the country's largest manufacturer and seller of civil explosives, in 2015. In Peru, it acquired an 85% interest in the local company, Chemtrade, and a 70% interest in Industrias Cachimayo S.A., Peru’s only producer of ammonium nitrate, thus consolidating Enaex’s place as the region’s largest producer.
In June 2015, Enaex began to expand beyond Latin America. To date it has acquired 100% of Davey Bickford Enaex, a world leader in manufacturing electronic detonators and initiation systems. The France-based company has subsidiaries in Australia, Canada and the United States.
The Company has maintained a sound credit profile and good liquidity position. This year, Feller Rate and Fitch Ratings risk rating agencies confirmed their local risk ratings for Enaex S.A. at ‘AA’ and ‘AA-’, respectively. The Company was named the 2019 Best National Supplier in Mining on APRIMIN’s ‘Mining Club’ Network, the eighth ranking of mining suppliers organized by the Phibrand consulting company.
The community and the environment are also essential to Enaex’s growth plan. This is underpinned by its Clean Development Mechanism (CDM) projects, which began in 2006 and aim to reduce nitrous oxide emissions at the Prillex America complex.
On that note, the Company earned several important recognitions and
THE COMPANY
Enaex S.A., a subsidiary of the Sigdo Koppers Group, has more than 99
years' experience in the explosives market. Over the years, the Company
has become the world's third largest producer of ammonium nitrate.
certifications for sustainability and innovation. Specifically, it was listed on the Dow Jones Sustainability Index Chile (DJSI Chile) for the fourth straight year and ASIQUIM chose it for the Responsible Care 2019 award in the community relations and emergency response categories. In 2017, the Company developed two new technologies—the RoboMiner® and Mine-iTruck® teleoperated robotics solutions—in conjunction with Stanford Research Institute (SRI), ASI Robots, Terainox, Thecne and SK Godelius. After conducting the first teleoperated loading in 2018, this year we performed the world’s first 100% on-site teleoperated blasting tests. The Company also earned first place on ESE Business School’s Most Innovative Companies Chile 2019 ranking as the most advanced company in the mining services sector. Enaex plans to continue consolidating robotization and teleoperation of on-site operations, keeping people safer and improving productivity at mining sites.
The Company is known for its innovation, sustainability, exceptional quality, safety and passion for service. These values are key to satisfying customer needs and providing on-site solutions.
Enaex owns the world's largest ammonium nitrate production complex: Prillex America, which has production capacity of 850 thousand tons/year and produced a total of 732 thousand tons of ammonium nitrate in 2019.
In 2019, the Company continued to grow internationally, expanding its capacity to develop and export innovative, cutting-edge products and solutions for the global mining industry. It is currently the largest supplier of comprehensive rock fragmentation services for mining in Chile and Latin America.9
CONSOLIDATED EBITDA ENAEX S.A.(en miles de USD)
* EBITDA calculations do not include other income (losses) for 2011.
(In thousands of USD)
SUMMARY OF CONSOLIDATED FINANCIAL RESULTS ENAEX S.A.
2012 2013 2014 2015 2016 2017 2018 2019
Sales 641,429 648,482 645,950 761,766 692,368 705,173 783,218 766,544
Net operating income 126,211 122,505 130,341 148,629 128,478 124,928 124,999 126,249
Sales margin 20% 19% 20% 20% 19% 18% 16% 16%
EBITDA 152,348 150,476 154,170 180,657 165,259 164,373 164,533 172,497
EBITDA margin 24% 23% 24% 24% 24% 23% 21% 23%
Profit for the year 90,907 93,914 99,148 104,581 85,337 80,184 78,730 81,656
Assets 816,351 788,259 835,547 1,097,355 1,116,286 1,166,705 1,187,256 1,208,183
2012 2013 2014 2015 2016 2017 2018 2019
Average Price of Ammonia (US$/ton) 605 547 549 458 278 279 313 248
Ammonium Nitrate Production 811 773 782 782 700 683 702 732(thousands of tons/year)
Number of Employees 1,558 1,703 1,970 3,533 3,309 3,436 4,000 4,227
Number of Production Plants 5 7 13 13 13 13 14 16
Number of Service Plants 25 25 25 24 24 23 60 57
Number of Mobile Manufacturing Units 86 100 106 124 121 120 200 205
KEY FIGURES FOR ENAEX S.A.
2014 154,170
2016 165,259
2015 180,657
2013 150,476
2012 152,348
2017 164,373
2018 164,533
2019 172,497
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2015 2016 2017 2018 20192012 2013 2014
CONSOLIDATED SALES VOLUMESIn thousands of tons (Explosives, ammonium nitrate and chemicals)
853 838867
937
853 834
903
969
CONSOLIDATED REVENUEIn millions of USD
2015 2016 2017 2018 20192012 2013 2014
641 648 646
762
692 705
783 767
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COMPANY HISTORY 1920Compañía de Explosivos de Chile was founded on November 9th.
1923Explosive manufacturing began at the Río Loa Plant. The corporate name was changed to Compañía Sudamericana de Explosivos.
1972Through the Chilean Economic Development Agency (CORFO), the Chilean government took full control of the Company, changing its name to Empresa Nacional de Explosivos.
1974First Mobile Manufacturing Unit.
1983Production of nitric acid and ammonium nitrate began at the plant in Mejillones (Prillex America).
1987The Company was acquired by Chilean investors, FAMAE, and U.S.-based Austin Powder Company.
1989The Company's corporate name was changed to “ENAEX S.A.”
1990Sigdo Koppers acquired a 33% interest in Enaex S.A.
1991Enaex S.A. was formed as a publicly held corporation.
1992Construction of a new ammonium nitrate plant began in Mejillones.
1993Sigdo Koppers S.A. increased its ownership interest in Enaex to 50.01%.
1997The ammonium nitrate project began with an investment of approximately US$130 million in a new plant with production capacity of 350,000 tons/year. This investment brought the Company's total capacity to 450,000 tons/year.
1999Production of ammonium nitrate began at the new plant in Mejillones.
2001Enaex S.A. earned the National Quality Award (Premio Nacional a la Calidad) in the large corporation category.
2006The Company carried out a successful capital increase of US$68 million and secured two loans totaling US$125 million in order to finance the new ammonium nitrate plant in Mejillones. The Company decided to implement a carbon credit project in Mejillones.
2007Subsidiary Enaex Argentina SRL was created. The carbon credit project and construction of a new ammonium nitrate plant began.
2008The carbon credit project's certified emissions reduction initiative was launched.Subsidiary Enaex Servicios S.A. was created and the Company was split into manufacturing and service divisions.
2009The carbon credits project was approved under the Kyoto Protocol and the United Nations officially issued the first emissions reduction certificates, allowing Enaex to sell its carbon credits to Mitsubishi Corporation in Japan.
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2010The new ammonium nitrate plant (Panna 4) opened, bringing total production to 850 thousand tons and making it the world's largest explosive-grade ammonium nitrate production complex.
2011The Prillex complex reached its maximum nominal capacity at 850 thousand tons of ammonium nitrate per year. UNFCC approved the Panna 4 carbon credit project. Enaex solidified its position as the national leader in CO2 equivalent reduction and emission of carbon credits (Certified Emission Reduction, CERs).
2012Enaex S.A. acquires a one-third stake in IBQ Industrias Químicas (Britanite) in Brazil. In late 2012, Enaex launched a new project called "The New Enaex Cycle", updating its image and headquarters, aligning them with new growth and productivity challenges.
2013This year was key in defining Enaex's focus on a model based on continuous innovation.
2014In Peru, the Company acquired an 80% interest in Chemtrade, a company through which it was awarded the ammonium nitrate supply contract for Minera Antamina. In Chile, new contracts were signed with the Collahuasi mines, increasing Enaex's domestic market share.
2015Acquired 100% of IBQ Industrias Químicas (Britanite) and 91% of the Davey Bickford Group, a French world leader in manufacturing electronic detonators. In October, Enaex conducted its first bond issuance on the local market, for a total amount of UF 2.5 million.
2016Enaex became part of the Dow Jones Sustainability Index Chile (DJSI Chile) and Chilean Federation of Industry (SOFOFA) bestowed us with one of its most important national accolades, naming Enaex Outstanding Company of the Year.
2017Launched two new technological developments, RoboMiner® and Mine-iTruck®, robotized, teleoperated solutions for mining sites. In the financial realm, Feller Rate upgraded the Company's national risk rating from AA- to AA with a stable outlook.
2018Acquired 70% of Industrias Cachimayo S.A., located in Cusco, Peru. In innovation, the Company launched the Stemming-iTruck® and was recognized by Universidad Adolfo Ibáñez with the Technological Innovation in Engineering award.
2019
Phibrand consulting company’s eighth ranking of mining suppliers named Enaex S.A. Best National Supplier in the mining industry. The Company achieved a historic milestone with the world’s first 100% teleoperated blasting tests and earned first place on the ranking of the Most Innovative Companies Chile 2019.
Internationally, Sasol South Africa Limited selected Enaex as a preferred strategic partner with whom to create a joint venture with its Johannesburg-based subsidiary in the explosive and rock fragmentation sector.
In sustainability, Enaex was listed on the Dow Jones Sustainability Index (Chile) for the fourth straight year and ASIQUIM chose it for the Responsible Care 2019 award in the community relations and emergency response categories.13
BOARD OF DIRECTORS
CORPORATE GOVERNANCECHAIRMAN Juan Eduardo Errázuriz Ossa4.108.103-1 Civil Engineer
VICE CHAIRMANSergio Undurraga Saavedra**4.280.259-KBusiness Administration
Horacio Pavez Aro9.737.844-4Civil Engineer
Juan Pablo Aboitiz Domínguez*7.510.347-6Civil Engineer
Alejandro Gil Gómez5.054.638-1Businessman
Norman Hansen Fernández6.062.403-8Sociologist
Patricio Leighton Zambelli**8.255.566-8Business Administration
Alberto Salas Muñoz6.616.223-0Mining Engineer
Naoshi Matsumoto Courdurier9.496.299-4Business Administration14
*Member of the directors' committee, related to
the controlled companies, created in accordance
with art 50 bis of the Corporations Law.
**Member of the directors' committee, independent
from the controller, created in accordance with art
50 bis of the Corporations Law.
CHIEF EXECUTIVE OFFICERJuan Andrés Errázuriz Domínguez / 9.350.009-1Civil Engineer
CHIEF FINANCIAL OFFICERPablo Busquet Errázuriz / 11.472.210-3Business Administration
VICE PRESIDENT WEST LATAMEdmundo Jiménez Gallardo / 12.622.945-3Civil Engineer
VICE PRESIDENT OF HUMAN RESOURCES AND SUSTAINABILITY Patricia Valenzuela Urra / 8.267.412-8Psychology
VICE PRESIDENT OF CUSTOMER EXPERENCE AND DIGITAL TRANSFORMATIONPablo Wallach Beovic / 12.585.165-7Civil Engineer
VICE PRESIDENT OF CHEMICALSClaudio Yévenes Constanzo / 9.383.155-1Civil Engineer
VICE PRESIDENT OF INNOVATION AND START UPSMiguel Angel Peña Duarte / 10.279.473-7Civil Engineer
PRILLEX PLANT MANAGERCristobal Ugalde Rother / 13.433.063-5Naval Engineer
ORGANIZATIONAL DEVELOPMENT AND TALENT SUPPLY MANAGERJosé Miguel Camelio Canales / 15.641.286-4Civil Engineer
DEVELOPMENT MANAGERFrancisco Baudrand Biggs / 8.922.866-2Civil Engineer
PLANNING AND CONTROL MANAGERPablo Martinez Ferrer / 14.118.591-8Business Administration
ENAEX ROBOTICS MANAGERMarco Ruiz Hernández / 15.771.683-2Civil Engineer
ACCOUNTING MANAGERBerta Pasten Carrasco / 10.244.703-4Public Accountant and Auditor
INFRASTRUCTURE AND PROJECT MANAGER Jorge Rioja Ovando / 6.553.741-9Civil Engineer
ENGINEERING AND MAINTENANCE MANAGER Rodrigo Bravo Carmona / 13.056.296-5Civil Engineer
HSEC MANAGERLeonel Cataldo Morales / 8.054.812-5Civil Engineer
PUNTA TEATINOS PLANT MANAGERAlejandro Castillo Hamati / 9.152.917-3Civil Engineer
CHIEF EXECUTIVE OFFICER, DB CHILEMarcelo Toro Moscoso / 14.486.521-9Mining Engineering
UNDERGROUND MINING MANAGERDanko Morales Garrido / 12.590.636-2Civil Engineer
DIGITAL TRANSFORMATION MANANGER Renato Ramírez Iglesias / 13.549.494-1Civil Engineer
MAJOR COMPANIES MANAGERErik Muñoz del Pino / 7.719.693-5Civil Engineer
COUNTRY MANAGER CHILELuciano López Cordero / 12.227.163-3Civil Engineer
SERVICE MANAGER Hernán Sanhueza Figueroa / 8.439.567-6Civil Engineer
SUPPLY CHAINAND STRATEGIC ALLIANCE MANAGERIván Zapata López / 13.426.256-7Civil Engineer
COMPANY’S MANAGEMENT
COMMERCIAL MANAGERYasna Grayde Hill / 16.123.521-0Civil Engineer
COMMERCIAL MANAGEREnrique Vargas Araya / 15.337.008-7Business Administration
LATAM WEST HUMAN RESOURCES MANAGERSoledad De Palacios Rodillo / 9.032.677-5Psychology
COMPENSATION, BENEFITS AND REMUNERATIONS MANAGERPatricio Melo Grollmus / 13.963.897-2Business Administration
MANAGERMaria Soledad Bauer Zambrano / 9.975.206-8Translation
ENAEX MINING TECNICAL SOLUTIONS MANAGERDavid Lindsay Scutt / 26.735.669-6Mining Engineer
CHIEF EXECUTIVE OFFICER, PLASMAFrancisco Portilla Campos / 15.382.884-9Business Administration
CORPORATE CONTROLLERFernando Moreno Pérez / 10.742.624-8Certified Public Accountant
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In 2019, Enaex worked with an external firm to certify that its corporate governance
standards comply with the practices recommended in Superintendency of
Securities and Insurance General Character Standard No. 385 (now CMF).
The Company has a Corporate Governance Code and formal policies on issues
including: proposal for candidates for director, orientation and ongoing
training of new directors, hiring independent consultants, self-assessment by
the Board of Directors, board confidentiality, insider information, and
succession of key executives.
RISK MANAGEMENT
The Company's Corporate Risk Management Model includes a Risk Committee as well as formal risk management policies and procedures designed to provide reasonable certainty that objectives will be achieved and the Company's value will be maximized.
The Internal Control Area is responsible for coordinating updates to the corporate risk map, monitoring mitigation plans, auditing the main business risks and eliciting commitments to improve.
CORPORATE GOVERNANCE PRACTICES
COMMUNICATION AND INDEPENDENT REPORTINGON CONTROL AREAS
Direct, ongoing communication is maintained through quarterly board meetings. At least once a year, the Chief Executive Officer is excused from the meeting while the Board analyzes performance in conjunction with:
Independent Auditors:Issues like the external audit program and its results, deviations and potential conflicts of interest related to the audit company or its employees, among other issues.
Chairman of the Risk Committee:Proper functioning of the risk management process, methodology, risk map, residual risk levels, recommendations for improvement, action and contingency plans, among other issues.
Internal Controller:The Internal Audit program and its results, process risks, detected weaknesses, recommendations for improvement, follow-up on action plans, strengthening the control environment and the effectiveness of the crime prevention model.
Human Resources Division and Sustainable Development Unit:Effectiveness of policies on diversity and inclusion, organizational, social and cultural barriers that could inhibit natural diversity and, the usefulness and acceptance of sustainability reports distributed to relevant stakeholders.
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ETHICAL BEHAVIOR AND SELF-REGULATION
The Enaex Code of Conduct establishes an ethical-behavioral framework for directors, employees and/or consultants, all of whom are responsible for knowing and applying the provisions of the code. The Enaex Corporate Ethics Committee is responsible for promoting values and ethical conduct within the organization, addressing and resolving complaints and conflicts of interest in a timely matter and enforcing the corporate Code of Ethics.
COMPLAINT CHANNEL
The Company has a formal procedure for processing reports of possible irregularities or illegal activities. The channel is available to Company employees, shareholders, customers, suppliers or third parties. This procedure guarantees whistle blowers anonymity and freedom from retaliation. It also ensures that each complaint is duly addressed.
Complaints can be made at:• Complaint hotline (+56 2 2837 7696)• Complaint e-mail ([email protected])• Corporate website (www.enaex.com)
In 2019, a total of 24 complaints were filed (29 in 2018 and 18 in 2017). Following an objective, independent investigation of all cases, the Ethics Committee analyzed and then drafted a formal resolution for each complaint.
CRIME PREVENTION MODEL Laws No. 20,393 and No. 21,121 establish criminal liability of legal entities for the crimes of money laundering, terrorism financing, bribery, receiving stolen goods, inappropriate business dealings, corruption among private entities, misappropriation and improper management. To uphold the law with a preventative approach and maximum diligence, Enaex has a long-standing Crime Prevention Model. The model has been certified by an external company, BH Compliance, and is periodically audited to recertify.
FREE COMPETITION
Enaex promotes and respects free competition, a core value that must govern every aspect of business dealings. Competition stimulates efficiency and creativity, laying the foundation for fair and equitable business relationships. Thus, the Company’s clear structure for preventing anti-competitive practices includes essential elements like the Antitrust Compliance Manual, a Communications Procedure and a board-appointed compliance officer.
ENAEX'S BOARD OF DIRECTORS
Nine board members without executive responsibilities serve on the Company’s single-tier board. In 2019 attendance was 85% (95% in 2018) and board members had served for an average of 10 years. With the support of an independent consultant, the Board of Directors conducts a self-assessment process. All board members have sufficient experience in the chemical and mining industries and fields of administration and finance to direct the Company.
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AS OF DECEMBER 31, 2019, THE SHARE CAPITAL OF ENAEX S.A. WAS DIVIDED INTO 123,000,000SHARES. ITS 12 MAIN SHAREHOLDERS WERE:
Shareholder Number of Shares Ownership Interest (%)
Sigdo Koppers S.A. 74,687,564 60.72%Moneda S.A. - Pionero Investment Fund 7,651,750 6.22%Inversiones Gran Araucaria Dos Limitada (1) 6,229,000 5.06%Lucec Tres S.A. (1) 5,300,000 4.31%Inversiones Santa Filomena Limitada (1) 4,912,668 3.99%Inversiones y Valores Harabuquen Ltda. 4,359,373 3.54%BTG Pactual Chile S.A. C DE B (1) 4,064,383 3.30%Bolsa de Comercio de Santiago de Valores 2,984,875 2.43%Inversiones Auguri Ltda. (1) 2,850,000 2.32%Agrícola Cechi Ltda. (1) 2,425,000 1.97%Inversiones Schwember y Cia Ltda. 800,000 0.65%Moneda Corredora de Bolsa Ltda. 706,742 0.57%
(1) Non-controlling group with more than 10% interest.
OWNERSHIP STRUCTURE
In late 1990, the Sigdo Koppers S.A. Group acquired an interest in Enaex. Later, in 1993, the group became the Company's controlling shareholder. This prominent group has investments in: the service sector, through Ingeniería y Construcción Sigdo Koppers S.A., Puerto Ventanas S.A. and its subsidiary Fepasa S.A.; the industrial sector, through Enaex and Magotteaux, in the automotive sector, through SKBergé S.A.; and importation, sales and leasing of heavy machinery, farm equipment and transportation for construction and inputs, through SK Comercial S.A.
AS OF DECEMBER 31, 2019, ENAEX S.A.'S OWNERSHIP STRUCTURE WAS AS FOLLOWS:
16.22%PENSION AND INVESTMENT FUNDS AND OTHER SHAREHOLDERS
60.72%SIGDO KOPPERS S.A.
10.47%GRUPO STARS
12.59%GRUPO KARLEZI SOLARI
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WE ARE ONEOur corporate values, reflected every day in employee attitude and commitment, are celebrated
annually with the Enaex Spirit Award.
CORPORATE VALUES
OUR OBSESSION:EXCELLENCEWe strive for the highest technological and service quality standards.
We fulfill our commitments.
We work in teams with highaccountability and honesty.
OUR PRIORITY: LIFEWe put people’s safety and integrity first.
We are responsible with the environment.
We are committed to the social development of the communities where we operate.
OUR VOCATION: OUR CLIENTSWe have a vocation for service.
We are empathetic and cater to their needs.
We see our relationships with customers as partnerships.
Our passion is to provide solutions of exceptional value.
OUR STRENGTH: INNOVATION AND ENTREPRENUERSHIPWe develop in our people the audacity to find solutions.
We take risks to solve unresolved problems.
We have a long-term mindset.
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INCLUSIVENESS AND DIVERSITY
Conscious of the value of accepting differences, the Company complies with Law No. 20,015 (Workplace Inclusiveness Law), which seeks to eliminate discrimination and exclusion based on ethnicity, gender or other aspects that could affect an individual's dignity.
OCCUPATIONAL HEALTH AND SAFETY
Personal safety is a priority and is directly related to sustainable, successful development. To that end, this year, we continued working on the campaign that began in 2017 around the corporate value “Our Priority: Life”, promoting self care as well as protection for colleagues, communities and the environment.
INNOVATION
The Company considers innovation a key element in creating long-term value. Consequently, process, product and service innovations in safety, sustainability and infrastructure are an important part of its long-term strategy.
COMMUNITY INVOLVEMENT
The Company has committed to be an agent of positive change in the communities where it operates. Enaex makes concrete contributions that create social capital and earn recognition for the Company as a role model of environmental responsibility, safety and transparency.
CONSIDERATION OF AND COLLABORATION WITH STAKEHOLDERS
To promote ethical behavior and collaboration between all the organization's members.
To promote close, transparent dialog with the communities where the Company operates, actively generating social capital, through education and environmental protection.
To support local suppliers fostering collaborative relationships.
To build transparent, active relationships with relevant authorities through timely compliance with applicable legal standards.
To maintain and promote fair competition based on ethical business practices.
Through its Policy on Sustainability, Diversity and Inclusiveness, Enaex
seeks to establish measurable, long-term commitments.
ENVIRONMENTAL PROTECTION
To promote environmental responsibility in all business areas, seeking, first and foremost, to comply with all current rules and regulations.
To progressively increase the efficiency with which the Company uses and manages natural resources.
To maintain its leadership position in climate change management, maintaining low-carbon emissions in ammonium nitrate production and promoting energy efficiency initiatives.
To promote implementation of management systems that ensure ongoing process improvement as well as identification and control of environmental aspects.
POLICY ON SUSTAINABILITY, DIVERSITY AND INCLUSIVENESS
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EMPLOYEES
To provide opportunities for development, equality, participation and teamwork while encouraging dialog and safety.
COMPETITORS
To uphold fair competition based on ethical business practices.
INVESTORS AND SHAREHOLDERS
To produce long-term profitability, while upholding high standards of quality, sustainability and transparency.
CUSTOMERS
To provide comprehensive solutions, focusing on customer needs and expectations, delivering excellent, innovative, competitive products and services in a timely manner.
SUPPLIERS
To promote open, transparent and harmonious communication, contributing to the creation of shared value.
AUTHORITIES
To maintain a transparent relationship and actively comply with applicable legal standards.
COMMUNITY
To support the social, economic and environmental development of the communities in which we operate, actively helping to generate social capital.
The Company's primary stakeholders and its engagement plan for each
group is described below: Stakeholder Communication Channel Frequency
Community Website Ongoing
Working with neighborhood councils Monthly
Town hall meetings Occasional
Open-door Program Annual
Dual Education Program Ongoing
Facebook and Instagram accounts Ongoing
Investors and Shareholders Complaint Channel Ongoing
Work meetings Ongoing
Shareholders' Meeting Annual
Website: Corporate Section Ongoing
Suppliers Complaint Channel Ongoing
Supplier Portal Ongoing
Authorities Plant Visit Annual/Occasional
Collaborative Meetings Monthly
Employees Complaint Channel Ongoing
Workplace Climate Survey Annual
Orientation Ongoing (new hires)
Performance Evaluations Annual
Intranet Ongoing
Competitors Website Occasional
Customers Website: Corporate Section Ongoing
Customer Survey Ongoing
General Work Meetings Ongoing
FREQUENCY OF STAKEHOLDER DIALOGUE
21
STAKEHOLDERSOur business success depends on harmonious, collaborative work with all our stakeholders. Thus, we must work to identify the challenges facing the Company and areas for improvement.
Enaex maintains a holistic, strategic relationship with each of its primary stakeholders, thereby enabling effective communication in pursuit of mutual collaboration and sustainable competition.
Social Factor Environmental Factor Business Factor
Issues identified in the Company’s first Materiality Analysis (2017) were included in the 2017-2022 Strategic Plan in order to align the main business interests with those critical for stakeholders.
The material issues were identified simply by reviewing issues relevant to the chemical industry and analyzing important issues at Enaex (corporate objectives, sustainability challenges, Dow Jones Sustainability survey, press, etc.) in alignment with its business model.
The Company then consulted internal and external stakeholders through surveys and local communities through face-to-face interviews.
• Enaex Manager or Deputy Manager Survey (5)• Investor Survey (3)• Shareholder Survey (8)• Customer Survey (8)• Supplier Survey (5)• Enaex Employee Survey (19)• Community Survey (6)
ENAEX MATERIALITY MATRIX
ENAEX MATERIALITYPRODUCT QUALITY
INNOVATION
RESULTS
OPERATIONAL SAFETY
ENERGY AND CLIMATE CHANGE
ENVIRONMENTAL IMPACT
ETHICS AND TRANSPARENCY
MANAGEMENTSUSTAINABLE RAW MATERIALS
REGULATORY COMPLIANCE
ORGANIZATIONAL CLIMATE
PERSONNEL COMMUNITY
ENGAGEMENT
DIVERSITY, INCLUSIVENESS AND CULTURE
CUSTOMER SATISFACTION
RISK MANAGEMENT
Impo
rtanc
e to
Sta
keho
lder
s
Importance to the Business
Based on the issues of greatest importance to stakeholders and their impact on the Company, Enaex obtained the following Materiality Matrix:
The X-axis shows the importance the issue could have for the business. The Y-axis shows the relevance that the stakeholders assigned to each issue on the list.
22
Stakeholders Dimension Material Issue Description Impacted Coverage SDG Impacted
Employees are fundamental to business sustainability. Initiatives like talent development, leadership programs, flexible benefits, training, union management and an inclusion program adapted to career development aim to maximize each employee's contribution.
Enaex is committed to contributing to local community development through close, transparent dialogue as well as creating and building ties that consolidate long-term relationships of shared value. Finally, we strive to consider community interests and expectations in business decisions.
The Company promotes a culture of self-care, where safety is based on responsible conduct, on-site leadership and suitable performance tools that guarantee operations that are safe for employees and surrounding communities.
The chemical and mining industry, where the Company operates, has inherent risks that must be analyzed, assessed and managed in order to ensure long-term business viability.
Ethics and transparency are non-negotiable at Enaex and have become an opportunity for continuous improvement that generates value.
Healthy financial results that enable reinvestment and growth are essential to being a sustainable company.
The Company aims to provide comprehensive solutions that focus on customer needs and expectations, delivering excellent, innovative, competitive products and services in a timely manner.
Innovation is key to optimizing business sustainability by continuously developing flexible, creative, efficient, adaptable, environmentally friendly and socially acceptable products and processes.
The Company is proactive and thorough about managing compliance with legal requirements at all its subsidiaries and operations.
Promoting environmental responsibility in all business areas is a main objective at the Company as it seeks to use resources efficiently, continuously improve processes and identify and control relevant environmental impacts.
Since 2006, Enaex has consistently decoupled production of ammonium nitrate from greenhouse gas emissions through CDM projects and energy efficiency initiatives.
HUMAN RESOURCE MANAGEMENT
COMMUNITY ENGAGEMENT
OCCUPATIONAL SAFETY, HEALTH AND WELLBEING
RISK MANAGEMENT
ETHICS AND TRANSPARENCY
FINANCIAL RESULTS
CUSTOMER SATISFACTION
INNOVATION
REGULATORY COMPLIANCE
ENVIRONMENTAL IMPACT
ENERGY AND CLIMATE CHANGE MANAGEMENT
Employees
Communities
Employees Communities
EmployeesInvestors
Employees Customers Suppliers Investors Competitors AuthoritiesCommunities
Employees Investors
Customers Suppliers
Employees Customers InvestorsSuppliers
CommunitiesInvestors
Communities Employees
Communities Employees Investors Suppliers Customers
Internal
External
Internal / External
Internal / External
Internal / External
Internal / External
External
Internal / External
External
Internal / External
Internal / External
Social
Economic
Environmental
SUSTAINABLE CITIES AND COMMUNITIES
NOPOVERTY
QUALITY EDUCATION
AFFORDABLE ANDCLEAN ENERGY
GENDEREQUALITY
DECENT WORK AND ECONOMIC GROWTH
DECENT WORK AND ECONOMIC GROWTH
DECENT WORK AND ECONOMIC GROWTH
DECENT WORK AND ECONOMIC GROWTH
DECENT WORK AND ECONOMIC GROWTH
DECENT WORK AND ECONOMIC GROWTH
GOOD HEALTHAND WELL-BEING
GOOD HEALTHAND WELL-BEING
CLIMATEACTION
PEACE, JUSTICEAND STRONGINSTITUTIONS
PARTNERSHIPSFOR THE GOALS
CLEAN WATER AND SANITATION
LIFEBELLOW WATER
LIFEON LAND
Additionally, each material issue was tied to Sustainable Development Goals (SDG) from the United Nation’s Agenda 2030 and thus contributes to the country’s efforts to meet these goals. The primary material issues under analysis are:
23INDUSTRY, INNOVATION AND INFRASTRUCTURE
PARTNERSHIPSFOR THE GOALS
INDUSTRY, INNOVATION AND INFRASTRUCTURE
INDUSTRY, INNOVATION AND INFRASTRUCTURE
PEACE, JUSTICEAND STRONGINSTITUTIONS
PARTNERSHIPSFOR THE GOALS
INDUSTRY, INNOVATION AND INFRASTRUCTURE
RESPONSIBLECONSUMPTIONAND PRODUCTION
RESPONSIBLECONSUMPTIONAND PRODUCTION
CLIMATEACTION
CLIMATEACTION
STRATEGY2.
Business ModelProducts and ServicesBlasting ServicesProduction PlantsInnovation and DevelopmentKey PartnersOpportunities and Risk FactorsFinancial Policy
2627293034383941
B U S I N E S S M O D E L
• Comprehensive logistics for product and service distribution in Chile and around the world
VALUE PROPOSITION
• Specialized sales team• On-site technical support• On-site staff• Customer satisfaction survey
CUSTOMER RELATIONS DISTRIBUTION CHANNELS
• Sale of raw materials and bulk explosive products• Sale of blasting services• Sale of initiation systems and accessories• Sale of high explosives• Sale of chemical products
REVENUE
KEY RESOURCES KEY PARTNERS
• Mining companies operating in Argentina, Australia, Brazil, Chile, Colombia, the United States and Peru.• Customers purchasing ammonium nitrate, explosive products and electronic detonators in more than 40 countries• Civil works customers• Nitric acid and chemical product customers
CUSTOMERS
KEY ACTIVITIES• Specialized product manufacturing• Low-density ammonium nitrate (long range)• Bulk explosives• High explosives• Initiation systems• Accessories• Customized blasting services• Technological development• Innovation• Carbon credit projects• Energy efficiency
• Suppliers of inputs• Suppliers of technology• Innovation managers• Research and development entities• Sigdo Koppers S.A. group companies• Legal counsel• Audit firms• Domestic and international banks• Financial entities• Bondholders• Customers• Board of directors• Shareholders
• Ammonium nitrate production complex, Prillex America• Packaged emulsions plants• Bulk emulsions plant• Detonator plant• Service plants in mining work sites• Highly committed, competent employees
COSTS
• Inputs• Salaries and wages• Depreciation and amortization• Maintenance• Logistics• Other costs
26
27PRODUCTS AND SERVICES
Thanks to its vast experience in ammonium nitrate production, Enaex has
become the largest producer in Latin America and third in the world.
With 99 years in the industry, it has established its leadership in the rock
fragmentation services market for large-scale mining in Chile and has become a
major player in the region's explosives manufacturing market.
Ammonium nitrate is also sold as a raw material used for on-site manufacturing of blasting agents at various mining sites. Enaex provides customer- and site-specific solutions using ammonium nitrate and other products. Today, the ammonium nitrate produced by the Company is sold directly to customers within Chile and abroad, including important destinations like Australia, Argentina, Bolivia, Mexico and Peru. In its explosives product line, Enaex produces a large amount of high explosives—including various types of dynamite, boosters, cartridge emulsions and detonators—at the Río Loa Plant in Calama. These products are used in blasting for open-pit and underground mining as well as small- and medium-scale mining operations.
2019 SALES BY PRODUCT 2019 SALES BY COUNTRY
12%BLASTING AND TECHNICAL SUPPORT SERVICES
13%CARTRIDGES(DYNAMITE, APD, EMULSIONS)
18%DIRECT SALES OF AMMONIUM NITRATE
21%BLASTING ACCESSORIES
1%CHEMICAL PRODUCTS
35%BULK (ANFO, MATRIX SOLUTION AND AMMONIUM NITRATE IN MINES)
4%ARGENTINA
53%CHILE
16%OTHERS
16%BRAZIL
11%PERU
RAW MATERIALS FOR EXPLOSIVES• Low-density ammonium nitrate• Prillex IR: Low-density ammonium
nitrate (long range)• Prillex ULD: Low-density ammonium
nitrate (long range)• Prillex HPURE: Emulsion-grade high
purity ammonium nitrate• Prillex FR: Ammonium nitrate for
emulsions• 84% ammonium nitrate solution• Emulsions• Water gels
PRODUCT FAMILIES
BLASTING AGENTS • Mechanized ANFO (aluminized)• Heavy ANFO (pourable and pumpable)
INITIATION SYSTEMS• Non-electric detonators• Electric detonators• Electronic detonators• Detonating cords
OTHER PRODUCTS• Koolkap self-inflating bags• Power deck plugs (Taponex)• Quikdraw cannons• Flame retardant• Expansion cement• Rock blasting accessories
OTHER CHEMICAL PRODUCTS• 60% nitric acid
HIGH EXPLOSIVES• ANFO in sacks• Packaged emulsions• Dynamite• Coal mine permissible dynamite• Seismic exploration• Boosters• Cone boosters• Landslide control
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Enaex has an extensive network of service plants located at the main mining sites throughout Chile. Each plant provides a variety of services for the mining industry, such as: shot blasting, loading blasting agents, shallow mooring, plugging blast holes, checking blasting holes, and magazine management.
The blasting designs on which Enaex's services are based may be submitted by the customer or proposed by the Company's highly qualified, experienced engineering team. These proposals enable Enaex to add value to customer operations by training, advising and recommending the most appropriate techniques and products for each situation.
Leveraging its vast blasting impact experience and knowledge of crushing and grinding operations, the Company has optimized the fragmentation process and is able to offer complete blasting engineering services, These services, which range from blast hole design to blasting design, aim to optimize the fragmentation process. Today, the Company offers the entire value chain for comprehensive rock fragmentation services, ongoing innovation, technological development, efficient logistics and commitment to the customer.
Thanks to ongoing efforts to meet its customer’s needs and add value, the
Company has become the largest manufacturer and distributor of efficient,
innovative explosives in Latin America. Enaex is also Chile's leading provider of
comprehensive rock fragmentation services.
BLASTING SERVICES AND CUSTOMER TECHNICAL SUPPORT
MAIN CUSTOMERS / MINE / YEAR SALES BEGAN
OTHER COMPANIESAtacama Kozán 2002SQM Nitratos 2008Guanaco Compañía Minera 2010Proyecta S.A. 2010Minera Florida 2011Strabag Spa 2014Orica -Exsa -Maxam -
AUSTRALIARÍO TINTOMines in Australia 2009
BRAZILGRUPO VALEMines in Brazil 1995
YAMANA GOLDMines in Brazil 2017
PERUHUDBAY MINERALSMinera Constancia 2017
ANGLO AMERICANQuellaveco 2018
MMGLas Bambas 2018
CHILECODELCOCodelco Div. Northern Division (Chuquicamata, Radomiro Tomic, Ministro Hales) 1922Codelco Div. El Teniente 1922Codelvo Div. Norte (Gabriela Mistral, Salvador) 2018Codelvo Div. Andina 2018
ANGLO AMERICANLos Bronces 1995 Soldado 1996
MANTOS COPPER Mantos Blancos 1986Mantoverde 2007
ANTOFAGASTA MINERALSLos Pelambres 1995Centinela 2000Antucoya 2014Encuentro 2014
KGHMSierra Gorda 2011Franke 2011
TECKQuebrada Blanca 2012
BHP BILLITONCerro Colorado 2015
MINERA DOÑA INÉS DE COLLAHUASICollahuasi 2015
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CHILE
AMMONIUM NITRATE PLANT (PRILLEX AMERICA)Located in Mejillones.Production of ammonium nitrate.Current production capacity: 850 thousand tons/year.
MULTIMATRIX PLANT (PRILLEX AMERICA)Located in Mejillones.Production of bulk emulsions.Current production capacity: 250 thousand tons/year.
DYNAMITE AND EXPLOSIVES PLANT (RÍO LOA)Located in Calama.Production of cartridge explosives(dynamite, pentolite, PETN), ANFO in sacks and bulk emulsions.
INITIATION SYSTEMS PLANT (RÍO LOA)Located in Calama.Production of non-electric detonators, non-electric dual detonators, non-electric trunk line detonator.
FRANCE
ELECTRONIC DETONATORS AND OTHER ACCESSORIES PLANTLocated in the city of Héry.Production of electronic detonators and other accessories.
PERU
VEGUETA EMULSIONS PLANTLocated in the Vegueta district.Production of bulk emulsions.Current production capacity: 72 thousand tons/year.
AMMONIUM NITRATE PLANT (CACHIMAYO)Located in the city of Cusco.Production of ammonium nitrate.Current production capacity: 35 thousand tons/year.
EMULSIONS PLANT (CACHIMAYO)Located in the city of Cusco.Production of bulk emulsions.Current production capacity: 120 thousand tons/year.
ANFO AND EMULSIONS PLANT (PUNTA TEATINOS)Located in La Serena.Production of emulsions and distribution center for ammonium nitrate and cartridge products. Current production capacity: 60 thousand tons/year.
ARGENTINA
EMULSIONS PLANT AND DISTRIBUTION CENTER (CAMPANARIO)Located in the Province of San Juan.Production of bulk emulsions.
BRAZIL
EMULSIONS AND BOOSTERS PLANTLocated in Quatro Barras.Production of matrices, packaged emulsions, boosters and others.
PRODUCTION PLANTS
30
Our service plants, which are located near customer's mineral deposits and mining sites, feature all the equipment necessary for safe, high-quality, productive operations. The most noteworthy include: storage silos for ammonium nitrate and emulsions, magazines for storing high explosives and initiation systems, equipment for transporting raw materials, support offices and mobile manufacturing units. The latter are specially designed to transport raw materials (ammonium nitrate and oil) to be mixed on-site where they will be used. Mobile manufacturing units are custom designed and equipped for each mine, according to the most stringent safety standards. As of December 2019, the Company had a global fleet of 205 factory trucks for open-pit mining operations and 33 trucks for underground mining operations.
SERVICE PLANTS
MOBILE EQUIPMENT OPERATIONAL SUPPORT CHILE
TYPE OF MOBILE EQUIPMENT AND/OR VEHICLE
Mobile Manufacturing Units*
Mobile Loading Equipment for Underground Mining
Mining
Plugs
Cranes
Grinders
Mobile magazines
Matrix solution (emulsions) transport trucks
Bulk ammonium nitrate transport trucks
Nasol transport trucks
Nitric acid transportation trucks
TOTAL MOBILE EQUIPMENT
205
33
51
20
7
62
153
97
55
1
1
685
*Includes Chile, Brazil and Peru in addition to 33 Milodón trucks.
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I N N O V A T I O N
I S A L S O
T H I N K I N G
B I G
The Company has been working on systematizing the innovation management process in order to make innovation continuous and sustainable over time. A significant part of these efforts has focused on developing specialized products and services to meet our customer's specific and significant everyday needs.
TELEBLASTING AND ROBOTIC DEVELOPMENTSThis year Enaex made significant progress on implementing new open-pit mining technology in order to perform on-site teleoperated loading operations. This requires testing the important strides made in the tremendous challenge of robotizing the blasting processes that the Company has been working on in recent years.
The new solutions focus primarily on three objectives: Always striving to improve levels of personal safety, the first is to offer a solution for high-risk operations. Second, we seek to make viable mining resources whose risk levels hinder traditional operations. Finally, we aim to implement remote, automated operations, modernizing traditional mining and making advances in technology and productivity.
FIRST PLACE ON THE MOST INNOVATIVE COMPANIES RANKINGEnaex earned first place on ESE Business School’s Most Innovative Companies 2019 ranking for mining services, which recognizes systematic capacity for business innovation. The award considers the factors of strategy, culture, leadership, innovation process, use of strategic assets and impact on value creation.
AN INNOVATIVE LOOK AT THE SHORT AND LONG TERMIn September, an international workshop was held to draft the Enaex group’s innovation route for the coming years. More than 50 Enaex employees from around the world brainstormed nearly 180 ideas, resulting in 24 projects to be carried out in the next 5 years.
NEARLY 80 INNOVATION INITIATIVES IN THE GLOBAL PORTFOLIOOver the years, the Company has increased its capacity to develop and export innovative products and solutions to different parts of the world. Examples include the Milodon® MMU, which is currently operating in some service operations in Brazil and Peru, and products like Vertex® Energex® and Plasma®, which are being used in Brazil.
32
MINE-ITRUCK®
Mine-iTruck® is a mobile manufacturing unit that is entirely teleoperated. It is specially designed to manufacture ANFO and Heavy ANFO (pourable and pumpable) and gasifiable products for blasting in open pit mining. With remote capabilities, raw materials can be transported and blasting agents can be manufactured, making it possible, in conjunction with RoboMiner®, to perform completely remote and safe operations.
STEMMING-ITRUCK®
A grinder truck with Mine-iTruck® functions, Stemming-iTruck® is able to carry material for plugging blast holes in open pit mines. It can be teleoperated from the control station—a safer and more comfortable workplace outside the blasting site—to transport gravel and unload it in the blast hole.
ENAEX ROBOTICS
One of the most significant milestones in 2019 was the world’s first 100% teleoperated on-site blasting tests, a historic event for the industry. The testing was performed in the presence of the National Geological and Mining Service (Sernageomin) and the Chilean Testing Bank (Banco de Pruebas de Chile, BPCh), a technical body that belongs to the Chilean Army and interfaces with the General Bureau of National Mobilization (DGMN) in the process of validating blasting products, teams and technology. On the other hand, Enaex Robotics made major strides in automating the fleet of equipment currently performing teleoperations. This capacity lends new possibilities and significantly increases solution productivity.
ROBOMINER®
RoboMiner®, a cutting-edge robotic unit that has manipulation and developed manual skills, is specially designed for priming and mooring tasks in the blasting process for open pit and underground mining applications. The units improve personal safety by enabling remote operation performed from control stations situated far from the blasting area.
iCONTROL®
iControl®, the integrated control station for the aforementioned teleoperated equipment, makes operations safer and more comfortable for people. It also enables agile remote operations and integration into local telecommunications infrastructure or a company-owned network to set up operations in any area or territory.
The focus for 2020 is to consolidate operations at open-pit mines and continue to incorporate and adapt new technologies in order to boost productivity and operating efficiency and, above all improve working conditions for employees using robotic applications, where they will continue to play an important role in using the technology.
33
MESH OPTIMIZATION
VERTEX®This blasting agent is characterized by its versatility, enabling cost reductions through mesh enlargement.
REACTIVE ROCKSSolutions that seek to mitigate significant operating risks in mines where rocks react spontaneously given the presence of pyrite in the rocky massif.
PIREX®This blasting agent is specially designed to retard the reaction of ANFO and the pyrite found in the rock.
PIREX S®Product designed for reactive rock conditions and reinforced with mechanical sensitization to ensure performance in adverse terrain conditions.
PRODUCTIVITY AND LOGISTICSSolutions focused on efficiency in logistics processes and greater productivity.
DUOLEX®A single-base matrix that aims to create two products for different underground mining applications: Duoblast-V for production shots and Duoblast-H to form tunnels.
ENAEX VR TrainingVirtual reality training that aims to improve the robustness and safety of on-site operations by reinforcing best practices and employees’ theoretical knowledge.
ENERGY CONTROLSolutions that seek mine stability by controlling the energy used during blasting. These solutions aim to ensure sustainable operations with appropriate slope and wall controls.
HIDREX®
PANFEX® Control Sec & PANFEX® Waterproof
ENERGY OPTIMIZATIONSolutions that seek to maximize costs by replacing electric energy with chemical energy in the crushing and grinding processes. Optimized fragmenting processes generate considerable savings in the mining process.
ENERGEX®
PREBLAST® SYSTEMA method in underground mining for reconditioning rock with subsidence blocks. Enables production acceleration in the deepest mines with low-grade minerals.
UBEX ONE®This dual underground equipment is a mechanized on-site loading system for pumpable, gasifiable emulsions, for use in tunnels and civil works.
CHEMICAL PRODUCTSSolutions aimed at innovating chemical products.
PRILLEX HD®This high-density, high-purity ammonium nitrate is widely compatible with emulsifiers and is used to manufacture explosive emulsions and as fertilizer.
INNOVATION AND TECHNOLOGICAL DEVELOPMENT
The first explosives company in Chile to measure its carbon footprint
by product unit, Enaex’s carbon emissions are up to 40% lower than
other industry suppliers.
COMPETITIVENESS FACTORS AND ENAEX SOLUTIONS
34
Solutions that seek to innovate in the social aspects of the blasting
process in order to achieve sustainable development and community
protection.
PLASMA®A blend of salts and rapidly expanding metallic dust delivers an innovative, non-explosive rock fracturing product for civil works and mining.
TRADEMARKS, PATENTS AND LICENSES
BRANDS, PATENTS AND LICENSES The Company's assets include several trademarks. Given their track record and use, some of the developments, including Iniciador APD®, Softrón® and Enaline®, Milodón® high tonnage mobile manufacturing units, have become market bellwethers.
Pirex®, Energex®, Vertex®, Panfex®, Emulgex® and Preblast® brand products stood out between 2015 and 2017. In recent years, the company has also added robotics-related brands including RoboMiner®, Mine-iTruck®, Stemming-iTruck® and iControl® as well as brands associated with state-of-the-art technology developments like Enaex Go® and Enaex Bright®.
SUSTAINABILITY
INNOVATION AND TECHNOLOGICAL DEVELOPMENT 35
DIGITAL GOAL: “We commit to being the preferred partner for
our customers, supporting them in improving their business with
digital solutions.”
PILLARS:
Humanize mining by
reducing risk exposure
and improving workers’
quality of life through
the use of digital
technology.
3.
Achieve digital
integration with
customers, connecting
with their operations to
support them in their
operational excellence
process.
2.
Reduce variability in
internal processes to
improve service levels
and the customer
experience.
4.
Deliver customized,
value-added blasting
service using
comprehensive, global
and historic data to
optimize the results
customers need.
1.
EMBARKING ON THE PATH TO DIGITAL TRANSFORMATION
36 DIGITALTRANSFORMATIONThe recent exponential change in new digital or 4.0 technology has spurred the fourth industrial revolution. In response, in addition to technology, digital transformation also involves changing strategy and structures in order to use the adopted digital technology to harness opportunities. The mining industry is no exception and the Company wants to participate actively in digital transformation. Enaex sees technology as a means to add value for customers as it strives to be first in technology as well as relationships and delivering value.
In 2019, Enaex created the Digital Transformation Division, which reports to the Customer Experience and Digital Transformation Manager. The new division aims to address the challenges that the fourth industrial revolution poses for the mining industry. In order to address this challenge, the new division partnered with Enaex employees and customers to conduct research in order to establish a strategy, target and strategic objectives for the Company’s digital transformation.
In this context, they set a digital goal and 4 strategic pillars that will determine the nature of the projects implemented.
37
Learn about customer expectations related to digital transformation in order to ensure that new projects really add constant value to their real needs. The study revealed four central themes:
ENAEX BRIGHT®
One of the key projects, Enaex Bright® seeks to respond to customer’s digitialization needs. Enaex Bright® is a digital platform that will use historic data, advanced modeling and artificial intelligence tools to learn and generate customized blasting design recommendations for each occasion. The value proposal is to reduce the drilling and blasting cost for the customer, thereby increasing productivity.
The platform is fed by different sources of data from mining site subprocesses (drilling, loading the MMU, blasting results and others). Data is processed and analyzed to produce valuable information that is made accessible to different parties to guide decision making toward dynamic optimization of processes in order to enable quick adaptation to environmental changes. The Company will be able to provide more personalized service and positively impact the customer experience.
CULTURAL TRANSFORMATION
There is also an important human component to digital transformation as people take on new ways of working. They have to train and reinvent themselves while remaining open to new possibilities. In 2020, the Company will work to develop the skills that prepare employees for a successful digital transformation, where agility, flexibility, collaboration and adaptation to change prevail. The Vice President of Human Resources will collaborate on these efforts, which are part of the “Our Strength: Innovation and Entrepreneurship” corporate value.
1. IMMEDIACY AND AVAILABILITY OF OPERATIONAL DATA FLOWS: Get exact, real-time data on service and service outputs.
2. USE OF HISTORIC DATA AND ADVANCED ANALYTICS TO IMPROVE SERVICE YIELD: Get better recommendations to optimize blasting results by using data from experiences and similar cases.
3. IMPLEMENTATION OF TECHNOLOGY TO SAFEGUARD EMPLOYEE WELLBEING: Reduce worker risk exposure by avoiding their presence in hazardous areas.
4. COORDINATION WITH OPERATIONS AND EFFICIENT SERVICE EXECUTION: Optimize service execution and reduce process variability by improving coordination and use of resources.
CUSTOMERS
LEGAL COUNSELVillaroel y Compañía Limitada.
AUDITORSDeloitte Auditores y Consultores Ltda.
MAIN INSURANCE POLICIES• Physical damage, which covers physical assets under company ownership or responsibility,
including loss due to business interruption resulting from an accident.• Corporate third-party civil liability (third-party damages and operations in Mejillones port
terminal).• International transport for import/export goods.• Vehicles and mobile equipment.• Transportation and cabotage for all goods transported between the plants or distribution
centers within Chilean territory.• Personal accident coverage for all executives.• Insurance policies on local sales credit and export loans.• Insurance policies to protect against cybernetic risks and crimes.• Insurance policies on robotics and teleoperations equipment.
SUPPLIERS For supply of ammonia, the main raw material in the production of ammonium nitrate, Enaex holds a long-term supply contract with Trammo, a major player on the international ammonia market. This is the only supplier that represents more than 10% of the Company’s total purchasing costs and the payment terms are cash.
In order to provide the best supply conditions, the Company establishes strategic relationships, primarily related to provision of raw materials, containers, packaging and third-party services, which concentrate approximately 55% of domestic costs. Ninety-two percent of suppliers are paid within 30 days, while payment terms are longer for the remaining 8%.
To ensure sustainability, the Company also balances its suppliers to include both Chilean and international suppliers capable of making and faithfully fulfilling commitments. For third-party service agreements, the Company’s social selection criteria dictates that at least 30% of personnel must be from the area where the service is rendered. Environmental criteria have not been implemented.
The Company's main suppliers of raw materials and services include: Trammo, Nelson Brothers, Compañía de Petróleos de Chile, Pst Industries, Transporte Bello, Transporte Gil, among others.
The previously certified Crime Prevention Model complies with Law No. 20,393, which regulates the prevention of money laundering and other crimes and includes control measures meant to minimize this type of risks.
KEY PARTNERS
KEY FINANCIAL INSTITUTIONS
CHILEAN
Banco Crédito e InversionesBanco de ChileBanco EstadoBanco ItaúBanco SantanderHSBCScotiabankMoneda S.A.
INTERNATIONAL
Bank of Tokyo-MitsubishiBank of America Merrill LynchCorpbanca ColombiaCorpbanca New YorkCitibank N.A.HSBC New YorkEDCJ.P. MorganNova ScotiaSociété GénéraleCaixa Bank
38
INTERNATIONAL GROWTH
As the mining industry recovered, the Company developed new capabilities and investments by building plants or making acquisitions in different markets where it operates and exporting innovative products and solutions.
The Company's multiple integration processes enable greater international competitiveness.
EMPLOYEE EXCHANGE PROGRAM
The Company offers an inter-subsidiary fixed-term employee exchange program in order to spread best practices and identify potential synergies within the group.
DEVELOPING SYNERGIES
More than four years after the 2015 acquisition of new subsidiaries Britanite and Davey Bickford, Enaex continues to develop important operating, financial and innovation synergies to be leveraged in the short and medium-term. Britanite expanded the Company’s expertise in civil works and provided direct access to iron and aluminum markets in Brazil. Now operating under the name Enaex Britanite, both brand's characteristics and commercial relationships with the regional mining and civil works sectors optimize the Company's image in Brazil. On the other hand, Davey Bickford Enaex, a leader in initiation systems that operates on almost all continents, grants the Company access to an international distribution network at a global level.
The Company continues strengthening its regional leadership through subsidiaries Enaex Argentina, Enaex Colombia, Enaex Mexico and Enaex Peru, which provide products and comprehensive rock fragmentation services.
OPPORTUNITIES AND RISK FACTORS
INNOVATION AND TECHNOLOGICAL DEVELOPMENT
The Company has developed a technology portfolio including products and processes through in-house development, licensing agreements and technology exchange with industry leaders. This culture of innovation has enabled Enaex to win several bidding processes with new customers and report increasingly better results. Furthermore, the Company’s subsidiary Davey Bickford Enaex has helped solidify its international leadership in mining innovation.
TRAINING TO IMPROVE PRODUCTIVITY
All employees have access to training and development programs that aim to help the Company meet high quality standards and maintain long-term relationships with all customers and suppliers. Furthermore, with the acquisition of Britanite, the Company managed to improve the efficiency of its logistics and supply processes.
OPPORTUNITIES
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ACCIDENT RISK
The Company holds insurance policies to cover physical loss to its property, losses due to resulting business interruptions, as well as civil liability and cyber risks.
INPUT ANDPRODUCTION FACTOR RISK
The Company is impacted by variations in international ammonia prices, which are sensitive to oil and natural gas prices. To mitigate the risk of fluctuation in this input, customer contracts stipulate periodic rate adjustments based on indexation formulas that account for this product. Risks in fluctuations in the cost of other relevant production inputs, like oil or electricity, are also covered using indexation formulas.
FINANCIAL RISK
The Company manages currency, interest rate and working capital financing risk. In exchange rate risk, in 2009 the Company established the US dollar as its functional currency because the majority of its commercial operations and investments are in that currency.
MARKET RISK
Following the 2015 acquisitions, the Company has benefited from diversification and vertical integration of its operations with a greater presence in the region’s other mining markets and technological markets for initiation systems around the world. Enaex has strong exposure to copper production in the region. Approximately 75% of sales are tied to copper production and about 10% to steel and gold production. The remaining sales are tied to production of other minerals by small and medium mining companies, civil works, chemical sales and exposure to other regions like North America, Africa, Europe and Oceania.
Furthermore, the Company is exposed to international price competition for ammonium nitrate, which depends on fluctuations in installed capacity, which affects both local and export sales.
CREDIT RISK
Revenue is tied to long-term relationships with regional customers renowned for their experience and solvency. According to company policy, loan insurance policies are purchased to cover the majority of clients in Chile and abroad with different risk. Even so, there are customers without coverage on certain markets where the Company operates, which implies possible credit risk.
Likewise, its financial obligations (both short and long-term) are primarily secured in that currency in order to reduce the exchange rate risk on cash flows and earnings. Since the local currency remains the functional currency of some subsidiaries, Enaex has some exposure to exchange rate fluctuations, primarily the euro and the Brazilian real. Thus, the Company maintains currency and interest rate swaps.
Enaex has a sound financial position, as reflected in the confirmation of its risk ratings from Feller Rate (AA-, stable outlook) and Fitch Ratings (AA-, stable outlook) in 2019.
RISK FACTORS
Instrument Fitch Ratings Feller RateShares Level 3 First class level 3 Bond line AA- (Stable) AA (Stable)
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The Company's conservative financial policy has resulted in a sound
financial position.
FINANCIAL POLICY
For major investment projects, Enaex policy allows a mixed funding structure, including external sources (local and international banks), publicly tendered bonds, company-generated funds and capital contributions. The Company aims to maintain a conservative medium-term debt structure and comfortable covenant cushion. The Company's smaller investments aim to sustain growth and ensure normal replacement of operating assets, upgrades and new equipment to expand and improve production capacity. Such investments are generally funded with the Company's operating cash flows. Short-term bank debt is generally used to cover working capital needs, which are primarily related to the purchase of ammonia. It is worth noting that levels of short-term bank debt can vary throughout the year as a result of fluctuations in the international price of ammonia and production process efficiency. As part of the strategies to face exchange market volatility, the Company maintains strict control of its investments, cash flows and working capital while focusing on maintaining its stock and credit ratings.
MAIN CONSOLIDATED FINANCIAL RATIOS
2012 2013 2014 2015 2016 2017 2018 2019
Financial Debt* / EBITDA 1.3x 1.1x 1.2x 2.0x 1.8x 1.7x 1.8x 1.9x
Debt / Equity 0.7x 0.54x 0.57x 0.98x 0.84x 0.81x 0.84x 0.84x
EBITDA / Financial Expenses 31.6x 32.9x 37.5x 18.8x 11.4x 11.5x 12.8x 12.9x
*Financial Debt: (Total Financial Liabilities - Hedge Assets).
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BUSINESS AREAS3.
Corporate Development PlansMining IndustryExplosives Market
444747
CORPORATE DEVELOPMENT PLANS
Davey Bickford USA
Enaex Mexico
Davey Bickford Australia
Enaex Peru
Enaex Britanite
Enaex ArgentinaEnaex Chile
Enaex Colombia
Enaex Davey Bickford
The Company is currently the largest supplier of comprehensive rock
fragmentation services in Chile and Latin America. Its 2015 acquisitions helped
Enaex successfully achieve some of its strategic goals, like regional leadership
and increased global presence.
In keeping with its strategic plan, in 2019 Enaex was selected by Sasol South Africa Limited as a strategic partner for a joint venture with its subsidiary in the South African explosives and rock fragmentation industry. In innovation and development, the first 100% on-site teleoperated blasting tests were conducted, marking a major global milestone. The Company innovates to improve process productivity with an emphasis on customer needs and personal safety.
Thanks to this effort, the Company continues to win bids with new customers and is able to offer unique products. Enaex's strong performance was also thanks to our employees, who have kept the highest quality standards and embraced a global culture.
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ENAEX ARGENTINA
Enaex Argentina has been servicing open-pit and underground mines since 2007. It owns the High Explosives Plant in Olavarría and, as of 2014, the Campanario Emulsions Plant (PEC) which has an annual production capacity of approximately 65,000 tons. This project secures supply for local customers, minimizing risks associated with import substitution policies, and increasing the probability of being awarded future contracts. The Company also performs underground loading operations with the Underground Bulk System—the first of its kind in Argentina—using UBS equipment and emulsions produced at the Campanario Emulsions Plant. In 2019, the Company won new bids in the province of Santa Cruz.
ENAEX COLOMBIA
The Company has been operating in Colombia since 2010, when it built and opened a high-tech packaged emulsions plant through a partnership contract with the defense industry. The mining energy sector is the main driver of the Colombian domestic economy. Colombia is home to large-scale, open-pit coal mining operations as well as gold, nickel, copper, limestone and iron ore operations, which are becoming important alternatives for the country's mining development. Likewise, Colombian roadway and port infrastructure development is in full swing. Consequently, there will be significant growth in the demand for explosives in coming years and important opportunities for blasting services and technical support.
ENAEX PERU
In 2014, the Company entered the Peruvian market, acquiring an 80% interest in Chemtrade, an explosives manufacturing and blasting accessories company that now operates under the name Enaex Peru. Products like ammonium nitrate, boosters, dynamite and cartridge emulsions are also imported, primarily from Chile. In 2017, Enaex Peru began blasting service operations at Minera Constancia, owned by Hudbay Minerals. In 2018, it began at Quellvaveco, a copper mine owned by Anglo American and Mitsubishi Corporation. It also increased production capacity by acquiring 70% of Industrias Cachmayo S.A., Peru’s only producer of ammonium nitrate.
In order to supply our mining customers more efficiently, in 2019 Enaex Peru increased production capacity by constructing an emulsions plant with a capacity of 72,000 tons a year in the Vegueta district and another with a capacity of 120,000 tons a year in Cuzco.
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ENAEX BRITANITE
IBQ Industrias Químicas (Britanite), now Enaex Britanite, is an explosives and rock fragmentation services company founded in 1961. With more than 50 years of experience, it has a strong market share in major infrastructure projects in Brazil. Enaex Britanite leads its segment in Brazil thanks to a history is marked by entrepreneurial spirit, determination, and the strength of its team. Its main products are detonating chord, pumpable and cartridged emulsions and initiation systems. They primarily supply the heavy civil construction, mining and quarrying industries as well as a wide network of distributors. Enaex Britanite stands out for also offering technical assistance and distribution to these segments. Headquartered in the city of Quatro Barras, Enaex Britanite operates in more than eight Brazilian states.
Harnessing group synergies, Enaex Britanite added the Milodón® truck to its blasting operations. It also added Vertex® and Prillex® ULD to its product portfolio.
In a 2018 survey published in the Brazilian mining journal, Minérios, 170 mining and civil works customers in Brazil recognized Enaex Britanite as the leading company in terms of market share and customer satisfaction in the Brazilian blasting market. Furthermore, Enaex won first place in the Best Suppliers category at CMOC Brazil’s first CMOC Suppliers Award, which evaluated the company’s performance in health, safety, social and environmental aspects. In 2019, Enaex also won the Top Engineering award in Detonation Engineering and Fire and Explosives Planning awarded by the Alumni Association from the School of Engineering at the Federal University of Minas Gerais (AEAEEUFMG). It was also recognized as the Company with the best safety performance at the SEST 2019 event for contractors and suppliers of products and services with the best practices in safety and sustainability.
DAVEY BICKFORD ENAEX
Davey Bickford Enaex leads the world in design, manufacturing and distribution of electronic detonators, which are known for producing more precise results in the rock fragmentation process. Founded in France with the invention of the safety fuse in 1831, the company has nearly 200 years of innovation experience. Operating in France, Australia, Canada and the United States, the company primarily serves the markets of blasting, excavation and seismic exploration for mining. In 1998, the company pioneered electronic initiation systems. Its history of ongoing innovation expands Enaex's ability to innovate and develop new blasting solutions. Davey Bickford Enaex also focuses on safety, from design to implementation, for all its products. The company complements its products with services proven to increase customer productivity. It proposes operating optimizations based on the use of electronic products and preventing any type of uncontrolled interruption.
In order to increase global capacity, the company implemented its first automatic assembly machine for electronic detonators in 2016. It launched the “Big Data” innovation project to optimize customer operations.
At the December 2019 celebration of Chemical Day in the French Alps, Davey Bickford Enaex received an award for Health and Safety from France Chimie, a professional organization that supports and brings together the French chemical industry. This accolade is given to companies that are noteworthy and innovative in health, safety, environmental and social matters. The value promoted in the Hery detonator plant, “Life: Live better at the company” was also recognized.
One outstanding innovation, Daveytronic® Evolution, is a new digital electronic initiation system with unique safety and technology features used in large-scale blasting operations that are highly complex due to adverse climate conditions.
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47MINING INDUSTRY
According to the World Bank’s most recent economic data published in January 2020, the United States grew at a rate of close to 2.3% in 2019 after expanding 2.9% the previous year, while the Eurozone grew 1.1% this year and 1.9% in 2018. Elsewhere, Chinese economic growth was about 6.1%, down from 6.6% in 2018 and 6.8% in 2017. As a result, global GDP stabilized at around 2.4% in 2019.
The report also indicated that emerging economies maintained growth of about 3.5%, with China pulling ahead near 6.1%, a figure in line with its 6.2% target. Meanwhile, Chile’s economy expanded about 1.3%, far below the 4.0% recorded in 2018. Brazil grew at a rate of about 1.1%, making this the third straight year of growth since its recession period. More moderate growth figures of around 4.1% are expected for developing economies in 2020, resulting in an increase comparable to this year as a number of emerging economies will overcome economic stagnation. However, growth projections place Chinese figures around 5.9%, down from the aforementioned 6.1%. On the other hand, moderate growth of 2.5% is projected for Chile. The aforementioned projections for 2020 are not adjusted to new growth estimates reflecting the volatility of the global economy in early 2020.
COPPER PRICES
Given an economic context dominated by uncertainty regarding trade tension between the United States and China, the price of copper fell to a low of 2.51 USD/lb in September 2019. The annual average of close to 2.72 USD/lb was 8.0% below the 2018 average of 2.95 USD/lb.
Cochilco estimates that the red metal will average 2.85 USD/lb in 2020 and 2.95 USD/lb in 2021. The speed of recovery will depend on whether China and the United States uphold their trade agreements, which have created market uncertainty and volatility in metal prices. The Chinese manufacturing sector's pace of expansion has consolidated with moderate growth in the last year.
COPPER PRODUCTION
In 2019, Chilean mining operations produced nearly 5.78 million tons, 0.8% lower than its 2018 record high and up 5.2% from the 5.5 million tons produced in 2017. According to Cochilco, copper production is expected to grow in 2020, with growth estimates of 1.5% bringing production to 5.87 million tons. As of September 2019, the potential project portfolio and existing investment for 2028 total nearly US$72.5 billion. If the entire project portfolio comes to fruition, Chile can be expected to reach production of 7.15 million tons of copper by 2028.
EXPLOSIVES MARKET
The businesses in which Enaex and its subsidiaries operate are primarily affected by the activity levels of the Latin American region's major mining companies, which directly and indirectly represent approximately 75% of copper production sales and approximately 10% of iron and gold production sales. The remaining sales are tied to production of other minerals by small and medium mining companies, civil works, chemical sales and exposure to other regions like North America, Africa, Europe and Oceania.
In terms of the global explosives market, there was evidence
of a worldwide over-supply of ammonium nitrate, which has driven prices down over the past four years. Rather flat growth in local and regional market demand is expected in the short- and medium-term. This is primarily attributable to efficiency and production efforts by the large-scale mining industry. The Company seeks to consolidate its presence in the Latin American market, continuing to develop business in its Argentine, Brazilian, Colombian, Mexican and Peruvian subsidiaries. Furthermore, the Company has entered new markets such as Asia Pacific, Oceania and North America, enabling it to diversify its sales and expand its global presence to around 40 countries.
SOCIAL PERFORMANCE4.
Human Resource ManagementHSEC Risk ManagementCommunity Management
505455
HUMAN RESOURCE MANAGEMENT
ORGANIZATIONAL CULTURE
This year marked the beginning of an important cultural shift in which the Company and its leaders adopt customer-focused agility and collaboration as a way of working. Enaex organized a Global Summit of leaders to show how technology is transforming business and customer relationships as well as how companies and their leaders can adapt to this transformation.
Through the “Our Vocation: OUR CLIENTS” value campaign, employees developed a way of thinking that prioritizes customer focus, delivering a service of value and replicating solutions using MVPs (Minimum Viable Product). At a major event, Bagriel Gurovich gave talks on digital transformation issues in Santiago, Calama and Mejillones. The talks were then offered to the entire community at Centro Cultural Gamelin Gallardo with local authorities and eleventh and twelfth-grade students at Juan José Latorre Benavente in attendance.
In relation to the “Our Priority: LIFE” value, for the second straight year, the “Enaex Team without Borders” participated in a marathon. This year, a team from Davey Bickford Enaex in France welcomed 3 Chileans and 2 Brazilians, who all raced with an Enaex team shirt. These opportunities seek to promote the “Our Priority: LIFE” value through sports and a healthy lifestyle for employees.
In 2019, Enaex continued working toward its vision of becoming the mining
industry's most prestigious company, delivering high-value solutions to the
world's most important mining regions.
As part of the transformation, the following main initiatives were
implemented in 2019:
50
ORGANIZATIONAL CLIMATE
For the fourth straight year, an organizational climate survey was conducted throughout the Company. Improvements were made to simplify and implement a new online system that facilitated the response process for employees and the results interpretation process for leaders.
The results were excellent, with 80% for the Company as a whole, up 3 percentage points from 2018, and 77% for Chile, the same figure obtained last year.
RECOGNITION PROGRAMS
The Company is convinced that recognition is essential to creating a positive working environment.
Its Recognition Program continued at the global level in 2019 as the mobile and web application was used to recognize others. The Company promoted the program with several face-to-face recognition ceremonies. As of December, it had reached an annual rate of 7 recognitions per person and a total of more than 33,100 recognitions annually, which all culminate in the Enaex Spirit award.
FLEXIBLE BENEFIT PROGRAM
Flexibility is the new, fundamental ingredient that has emerged as new generations join the workforce.
The flexible benefits program allows employees to select from more than 70 benefits according to their individual needs. Available benefits include time off, holiday bonuses, retirement, athletics, health, education, savings, recreation and other bonuses. Launched in 2014, the current program participation rate is 97%.
TALENT DEVELOPMENT AND SUCCESSION PLANS
The Company uses a performance-potential matrix to map and monitor its professional teams. Executives meet periodically to identify critical positions, succession plans and relevant facets. This year, Enaex was able to assess competencies at all the subsidiaries. Twenty eight percent of professionals were rated high potential and high performers.
INTEGRATION PROCESS
The professional exchange between all Enaex subsidiaries is one of the Company’s top integration initiatives. It seeks to create collaborative networks between the subsidiaries, share best practices, identify potential synergies and align cultures.
51
52INTERNAL MOBILITY
This year, approximately 63% of vacancies were filled from within the Company, including both international and domestic recruitment processes.
TRAINING
Enaex provided more than 58,000 hours of training, covering 83% of the total workforce with an average of 27 training hours per person, compared to 79% coverage in 2018. The program made sure to impart the technical specialization required to improve employee performance.
One of the most important milestones was the launch of Enaex Academy, a training system with two main objectives: increasing the effectiveness of training through the use of technology and optimizing self-management so that each employee is responsible for their performance at the Company. As of December, Enaex Academy has a training platform that includes more than 40 internal online courses (in microcapsule format) by Enaex experts. Furthermore, it includes use of virtual reality for training (Enaex VR Training) as well as partnerships with Massive Online Open Course (MOOCS) platforms through which employees can access courses and academic degrees from the world’s best universities.
“Career Development” was among the most important programs at the Prillex, Rio Loa and Services Plants. The program, carried out with the Technical Training Center at Universidad Católica del Norte and INACAP, enables workers to grow their knowledge and certify their skills to ensure operational excellence while furthering professional development. Globally, more than 100 training courses were added to the program this year. Employee skill levels rose an average of 25% and 21 employees were promoted within the Company.
TRAINING SCHOLARSHIP PROGRAM Fifty-two employees had their studies funded by the scholarship program. The initiative gives preference to programs leading to technical and professional degrees over graduate degrees. Furthermore, the Company
formed partnerships with different universities and technical-professional institutes to benefit the continuity of their studies.
LEADERSHIP PROGRAM
The Leadership Pipeline model that the Company implemented in 2018 has four leadership levels: leader of self, leader of others, leader of leaders and senior leader. This year’s leadership training focused on imparting knowledge for leaders in an agile context. The courses provided leaders with tools to acquire skills to manage change and collaborate to achieve targets. All 265 leaders in attendance said they would recommend the program.
At the operational level, a total of 84 operational leaders graduated in May and received a diploma from the learning certificate program on Leading Work Teams offered by Duoc-UC.
The Company implemented a supervisor assessment through which teams quickly and easily assessed their leaders on 5 key leadership practices: feedback, communication, consistency, care and commitment. The assessment was applied three times throughout the year and positioned itself as an important self-management tool for leadership. An average of 83% of participating leaders reached the minimum of three assessed practices and obtained results.
LABOR RELATIONS
Labor relations are fundamental to the Company’s development. When working with groups of workers—whether unions, negotiating groups or another type of organization—the focus has been on a single strategy: considering employees a fundamental part of corporate development. Under this vision, their needs and questions are the first priority on the executive agenda. The executives responsible for operations, the human resources division and the labor relations areas periodically meet with employees to ensure timely responses, communication and collaborative work. Ten negotiation processes were successfully conducted this year. Three of them were at the Rio Loa Plant, one at the Services Plant and the
SOCIAL INDICATORS
The following shows the percentage of the total workforce under 30 years of age, women and women with strategic positions at the Company.
*Indicator for ChileWomen in Strategic Positions = Women in strategic positions / Total Women Number of Women: 247Number of Women in Strategic Positions: 5
Year 2017 2018 2019 Meta Fulfillment
Total Workforce 3,436 4,000 4,227 - -
Under 30 22% 22% 23% 22%
Female 18% 18% 18% 12%
Women in Strategic Positions* 2% 2% 2% 3%
By Company
Enaex Servicios 1,558Enaex S.A. 425 Britanite 1,099Davey Bickford 625 Other Subsidiaries 520 Total 4,227
By Role
Senior Management 30Administration 84Supervisory 588Middle-Management 36General 1,300Subsidiaries 2,189Total 4,227
WORKFORCE
remainder corresponded to negotiation groups. These negotiations were within the framework of labor reform that came into effect in April 2017. The unionization rate was 52%, up from the 51% recorded the previous year.
INCLUSIVENESS AND DIVERSITY
In 2019, the Company continued addressing Law No. 20,215 through accreditation of those who participate voluntarily in the accreditation process set forth in the Inclusive Employment Law. Four people with disabilities were hired to work at different plants and offices. The Company sought to go beyond in terms of compliance and to generate spaces necessary for workplace inclusion throughout the entire organization.
SALARY GAP
Gender equity is of utmost importance to the Company. It seeks wage parity, ensuring that compensation is competitive and comparative, so that employee compensation is based on skills and experience. The 2019 salary gap was 6.5%. In other words, men earn 6.5% more than women. The 2018 gap was recalculated using 2019 guidelines, which consist of using salary level (GGS) and not position in order to gather a more significant sample on which to calculate the salary gap. Following these guidelines, the gap was 2.9% in 2018.
By Gender
Male 9 46 3,478Female 0 7 749
Board of Senior Directors Management Organization
ORGANIZATIONAL DIVERSITY
By Nationality
Chilean 9 31 1,949Brazilian 0 7 1,093French 0 8 537Others 0 7 648
By Age
Under 30 0 0 956Between 30 and 40 years 0 9 1,714Between 41 and 50 years 2 24 897Between 51 and 60 years 2 15 550Between 61 and 70 years 2 5 110Over 70 3 0 0
By Years of Seniority
Less than 3 years 4 7 1,825Between 4 and 6 years 2 9 757Between 7 and 8 years 0 16 429Between 9 and 12 years 0 11 404Over 12 years 3 10 812
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* No. of lost-time accidents *1,000,000 / man hours worked**No. of lost-time illnesses / Total hours worked*** No. of lost-time accidents *100 / No. of workers
HSEC MANAGEMENT SYSTEM
In 2018, Enaex implemented the Integrated HSEC-PSM Management System at its production plants (Prillex America, Río Loa and Punta Teatinos). The program is comprised of 20 elements distributed among three pillars:
• TALENT: Through talent development, education and training, employees build skills and model conduct, making safety a non-negotiable value.
• FACILITIES: Facilities also include the physical elements of the plants and their equipment. All facilities that are planned, built, operated and maintained ensure the integrity of people and teams.
• PROCEDURES: Operational discipline is a basic principle that demands clearly established standards and procedures so that people can perform tasks safely, properly and consistently.
As part of the new HSEC-PSM Management System, the Conduct Observation Program was implemented in production plants in Chile. The more than 4,400 interactions between supervisors and workers aim to positively reinforce behavior in order to promote cultural change in the area of safety.
SISTEMA DE GESTIÓN HSEC
HSEC RISK MANAGEMENT
OCCUPATIONAL HEALTH
Addresses current, local legal requirements. In keeping with corporate values, the program promotes a culture of health and quality of life through diagnostic initiatives and prevention of illnesses not associated with the working environment.
Enaex has 7 protocols at the national level:
1. PSYCHOSOCIAL: Multi-factor assessment that accounts for aspects of the task, organization of work, the environment and performance, among others.
2. TMERT: Work-related Skeletomusclar Disorders in the Upper Extremities3. MANUAL HANDLING OF LOADS (MHL): Law No. 20,949, which added the regulation on the
maximum manual load into the Labor Code to protect worker health.4. OCCUPATIONAL NOISE EXPOSURE: Health Ministry’s Protocol for Occupational Exposure to Noise5. PLANESI: National Silicosis Eradication Plan6. HIPOBARIA7. LACTATION AND MATERNITY PROTECTION: Law No. 20,545.
Additionally, the UV Radiation Protection program sought to teach about ultraviolet radiation, its risk factors and its potential impact on worker health; control measures: and proper use of Personal Protective Equipment (PPE).
RECOGNITION
The Prillex America Plant earned recertification for Responsible Care from Chile’s Industrial Chemical Association (ASIQUIM). Through this voluntary commitment, chemical companies commit to ongoing efforts to perfect the processes of producing, distributing, using and disposing of products in order to secure the best health and safety conditions for employees and the surrounding community while protecting the environment.
The Mutual de Seguridad recognized the Enaex Punta Teatinos Plant as an Outstanding Company for its great effort in implementing the Step-by-Step prevention campaign, which aimed to contribute to reducing accidents at work and in transit. It also held a recognition ceremony for Davey Bickford Chile for 10 years without lost-time accidents, another reflection of the Company’s commitment to life.
Enaex Britanite was recognized for the best performance in Safety at the SEST 2019 event, which gathers together Brazil’s contractors and product and service suppliers with the best practices in safety and sustainability.
GRUPO ENAEX SAFETY INDICATORS
2019
No. fatal accidents 0Lost-time injury frequency rate (LTIFR)* 2,01No. of lost-time accidents 17Occupational illness frequency rate (OIFR)** 0,09No. of hours lost to absenteeism 26,673Incident Rate: hours lost to incidents*** 0,4
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COMMUNITY MANAGEMENTThe Company set the social objective of being an agent of positive
change in the communities where it operates. Enaex makes concrete
contributions that create social capital.
COMMUNITY RELATIONS
55
“TEACH TO PROTECT” PROGRAM ENAEX BRITANITE, BRAZIL
For the second straight year, Enaex Britanite carried out the “Teach to Protect” project, developed in conjunction with the Quatro Barras Civil Defense in collaboration with the Municipal Office of Environment and Agriculture. The objective of the project was to raise awareness among students at the Joáo Curupaná da Silva municipal school regarding issues like: household accidents, emergency plans in the event of fire and concern for the environment.
The project was recognized with a 2019 SESIODS Seal, an award that represents commitment to UN Sustainable Development Goals and a 2019 Public Management award in the Project Excellence category. Through these initiatives, the Company upholds its commitment to Goal 4 (Quality Education) and Goal 17 (Partnerships for the Goals) of the UN’s 2030 Agenda for Sustainable Development. The purpose is to work collaboratively to improve people’s lives.
ACTIVITIES AT DAVEY BICKFORD ENAEX, FRANCE
Davey Bickford Enaex participated in a plan involving 10,000 companies that aims to include and integrate disadvantaged groups and young people who are not involved in the labor market. It also promoted sports by sponsoring 3 sports clubs (judo, basketball and archery); subsidizing and participating in the Chablis marathon in the Burgundy region with more than 40 employees running, and funding the SupMéca school through the New Défi project, which consisted of renovating some of the establishment’s facilities.
WORK WITH FISHERMENIN MEJILLONES
In January 2019, as a reflection of the success of our joint efforts and both parties’ commitment to improving the quality of life for the people of Mejillones, Enaex renewed its service contract with small-scale fishermen in Mejillones.
The same four fishing industry unions, which total 113 members, remained party to the renewed contract (STI Algas Rojas, STI Buzos y Asistentes Mariscadores, STI Buzos Mariscadores y Ramos Afines, Caleta Hornitos and STI Pescadores Artesanales y Buzos Mariscadores, Mejillones).
In addition to a special course to train supervisors for the services that the industry provides Enaex, 35 members from the 4 aforementioned unions participated in safety training. Furthermore, a Social Fund to support education and health needs was provided in February. Meetings were held with other companies from the Mejillones Bay to share the collaborative working experience.
SOWING SMILES
Through the Damas de Café Foundation, a group of workers from the Santiago office donated more than 100 gifts for the Christmas celebration for children with cancer at the Luis Calvo Mackenna and San Juan de Dios hospitals. Another group from the Río Loa Plant celebrated Christmas by giving gifts to Agrupación Sueño y Esperanza Down, a small institution serving about 20 children with Down Syndrome.
MAIN ACTIVITIES IN 2019
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NOPOVERTY
QUALITY EDUCATION
QUALITY EDUCATION
GOOD HEALTHAND WELL-BEING
REDUCEDINEQUALITIES
NOPOVERTY
DECENT WORK AND ECONOMIC GROWTH
ENVIRONMENTAL PROTECTION
As part of the annual Carbon Bond verification audit performed at the Prillex America Plant, representatives from the local community were invited to give their testimony before the United Nations and the World Bank. They spoke about what Enaex has symbolized over time and what it means today for the residents of the local community in terms of their performance in Sustainability and Corporate Social Responsibility (CSR).
OPEN-DOOR PROGRAM
This program seeks to meet the community’s need for information on how the Company works and the safety standards applied at production plants. In 2019, numerous relatives and community members visited the Prillex, Rio Loa and Punta Teatinos plants. The initiative was positively evaluated for its professionalism and transparency in response to questions about employees and safety as well as care of its facilities.
The following activities were highlights of this program: Technical visit by Inacap to the Río Loa Plant to tour the main Acid, Nitrate and High Explosives areas; Punta Teatinos Plant invited students from three rural schools (Punta Teatinos, El Romeral and La Estrella) to commemorate World Environment Day with a tour of the area where the different native flora and fauna are monitored; in addition to visits by employees’ family members and authorities like the Capitan of the Port of Mejillones, police officers from the Mejillones station and fire fighters.
COMMUNITY COLLABORATION SERVICE PLANTS
The Sierra Gorda Service Plant once again sponsored the Christmas celebration at Sueño de Colores preschool, which serves 104 boys and girls between 3 months and 4 years of age from the most at-risk area of Antofagasta.
DUAL EDUCATION PROGRAM
The program’s main objective is for students to apply the basics of their technical specialty, develop work and relationship skills that are useful in the workplace and experience an organizational culture and high executive standards.
To that end, the Prillex and Rio Loa plants offer an annual Dual Education Program through which 11th and 12th grade students from surrounding technical high schools spend three days at school and two in the plants. They complement and integrate their studies in a real working environment and gain early contact with the working world. Enaex’s Santiago office joined the Dual Education Program through the Fundación Chile Dual internship program, in which students work at the Company three days a week for three weeks during the year.
In conjunction with Engie Services, the Prillex Plant implemented a training and workplace insertion plan to improve the technical skills in 12th graders at the Juan José Latorre Benavente educational complex. As part of the project, Engie Servicios and Enaex employees spoke to the young people.
Of the 25 employees who trained as mentors, 7 are from the Prillex Plan, 16 from Río Loa and 2 from the Santiago office.
Dual Education Program 2017 2018 2019 2020
Prillex America Plant, Mejillones 12 14 17
Rio Loa Plant, Calama 23 18 27
Santiago Office Internships - - 4
Total No. of Students 35 32 48
Co-Op Students Target >30 >30
No. of Plant Mentors 21 21 25
No. of Office Mentors - - 2
57QUALITY EDUCATION
5. ENVIRONMENTAL MANAGEMENT AND ECO-EFFICIENCY5.
ENVIRONMENTAL MANAGEMENT AND ECO-EFFICIENCY
Corporate Carbon FootprintEnergy Consumption
6061
CORPORATE CARBON FOOTPRINT
Enaex began calculating its corporate carbon footprint using GHG Protocol (http://ghgprotocol.org) methodology in 2009 and has had it verified by an independent third party since 2012.
In 2019, total CO2eq emissions were approximately 1.4 million tons, 37% higher than the previous year due to technical problems in the catalyst that reduces greenhouse gas emissions at the Acid 4 Plant. The problem was not resolved until the end of 2019.
* Coverage is calculated as a proportion of revenue of each subsidiary included in the indicator relative to Enaex S.A.’s total revenue.
Emissions Unit of Measure 2019
PM10 Tons 19.1
NOx Tons 182.9
SOx Tons 8.2
Coverage % 58
AIR EMISSIONS
The Prillex America Plant voluntarily joined the National Air Quality Information System (SINCA) with two Air Quality Monitoring Stations, making it the first and only company in Mejillones to have NOx monitoring data validated and published on the Environment Ministry’s network.
SF6 emissions are not material in the Company’s operations.
Mton CO2 equivalent 2016 2017 2018 2019
SCOPE 1 233 254 194 630 Direct emissions
SCOPE 2 37 27 17 15Indirect emissions (purchased energy)
SCOPE 3 915 1,001 811 800Other indirect emissions
Total 1,185 1,282 1,022 1,445
Mton CO2 equivalent 2018 2019 Target 2019 Target 2020
GHG Emissions Scope1+Scope2 * (Mton CO2eq) 211 705 ≤ 200 ≤ 200
Production of ammonium nitrate (Mton) 702 732 >700 >700
Emissions Intensity Index in the production of ammonium nitrate (tonGheq./ton NA)
Coverage 62% 58%
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ENVIRONMENTAL COMPLIANCE
No fines or monetary sanctions were recorded for the Company in 2019.
EFFLUENTS AND WASTE GENERATED
The Company manages the environmental aspects of its operations by striving to reduce their potential impact. One highlight of these practices is the waste management program in place at the Río Loa plant since January 2019. The program recovers packaging waste generated by the packaged emulsions plant and reprocesses 100% of the packaging to replace 3% of inputs without impacting the quality of the end product. Additionally, the Prillex America Plant voluntarily made improvements to its collection and valuation plan for plastic containers from its products. It created a Plastic Packaging Pretreatment Center in its facilities to prepare and compact plastic packaging for subsequent recycling at an authorized facility. In 2019, the initiative recycled close to 101,742 kg of plastic.
There were no effluent spills in 2019.
(1) Coverage is calculated as a proportion of revenue of each subsidiary included in the indicator relative to Enaex S.A.’s total revenue.
Source Unit of Measure 2019
Total fresh water consumption Mm3 0.2578
Total water consumption from public system Mm3 0.0960
Total water consumption from surface bodies: rivers, lakes, other Mm3 0.0253
Total water consumption from underground springs Mm3 0.1364
Coverage (1) % 91
WATER CONSUMPTION
Water management issues are handled locally. Each plant creates an action plan based on its needs, operations and environmental and regulatory requirements. The Company is committed to the environment and to protecting the use of resources. Consequently, the primary focus is on using them efficiently.
Enaex plans to improve risk identification, assessment and management as well as opportunities related to water issues by including climate change issues in its analysis.
The policy is to uphold current legislation, regulations and protocols that are applicable to all plants and subsidiaries.
(1) Coverage is calculated as a proportion of revenue of each subsidiary included in the indicator relative to Enaex S.A.’s total revenue.
(1) Coverage is calculated as a proportion of revenue of each subsidiary included in the indicator relative to Enaex S.A.’s total revenue.
ENERGY CONSUMPTION
Electricity Consumption Unit of Measure 2018 2019
Electricity MWh 47.175 48.937
Coverage (1) % 88 91
Energy Source Unit of Measure 2018 2019
Diesel L 4,842,330 4,862,579
NG/LNG m3 1,327,614 1,091,655
LPG kg 473,495 1,067,816
Gasoline L 230,656 258,964
Coverage (1) % 88 91
(1) Coverage is calculated as a proportion of revenue of each subsidiary included in the indicator relative to Enaex S.A.’s total revenue.
Total weight of waste generated Unit of Measure 2019
Hazardous Waste Tons 1,750
Non-Hazardous Waste Tons 910
Total Waste Reused and Recycled Tons 647
Coverage (1) % 91
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