Today We Transform for the Future of Chile!
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TODAY WE TRANSFORM FOR THE FUTURE OF CHILE! 2019 ANNUAL REPORT Chuquicamata Underground Project I Abel Tejerina CONTENTS CORPORATE PROFILE 47 Corporate innovation SUBSIDIARIES AND AFFILIATED COMPANIES 4 Message from the Chairman of 51 Human Resources 110 Subsidiaries and affiliated the Board of Directors 58 Social responsibility and companies 6 Message from the CEO sustainable development 111 Mining companies 8 Board of Directors 60 Sustainability 118 Investment companies 9 Organization Chart 121 Electrical companies 10 Senior management TRANSPARENCY, INTEGRITY AND 122 Process plants 12 Challenges involved in Codelco’s GOOD CORPORATE GOVERNANCE 124 Research and technology most important transformation 75 Comprehensive risk management 126 Traders 14 Corporate Profile and control model 130 Port operations 19 History 78 Transparency and integrity: a key 131 Health & pensions 22 Timeline influence on good corporate 135 Subsidiaries and affiliated 24 Divisions governance 83 Annual Management Report of companies KEY INDICATORS the Director’s Committee 26 Key indicators CONSOLIDATED FINANCIAL TRANSFORMATION AND FUTURE STATEMENTS 136 Consolidated financial OUR MANAGEMENT 90 Chuquicamata Subterránea, statements 29 Economic-financial statements a cutting edge, sustainable 32 Productivity and Excellence C+ flagship project OFFICES AND REPRESENTATIVES 36 Financing 92 Investments and projects 287 Offices and representatives 38 International copper market 96 Mineral reserves and resources 41 Third party trade 105 Mining exploration in Chile and 44 Technology and automation in abroad business processes CORPORATE PROFILE WE SEEK TO CONTINUE CONTRIBUTING TO THE DEVELOPMENT OF CHILE For 48 years, Codelco has been Chile’s primary company. Today we are executing structural projects to extend the life of our ore deposits for a further 40 to 50 years. We are also raising our environmental standards, increasing our productivity and maintaining the current levels at 1.7 million tons of fine copper per year. Construcción de la caverna del chancador de Andes Norte, El Teniente Corporate Key Our Transparency, Transformation Subsidiaries 2019 Offices and Profile Indicators management integrity and and future and affiliated Consolidated representatives good corporate companies financial governance statements CORPORATE PROFILE 2019 CODELCO ANNUAL REPORT 4 MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS Juan Benavides Feliú, Chairman of the Board “The transformation that we are promoting, aimed at maintaining our contributions to Chile for at least 50 more years, is not only based on a perspective of production levels but also on a perspective of values. Our executives, professionals, workers and administrators have a duty to act in an accountable and transparent manner”. In 2019, Codelco commenced a profound business the demands of citizens. Therefore, we are implementing transformation. This inescapable task aims to a robust business plan that concentrates our efforts on reposition us among the most competitive, sustainable copper extraction. Accordingly, we have defined three and profitable copper producers in the world, while strategic approaches: operational excellence, project continuing to contribute to the nation’s development excellence and maximum efficiency in converting resources and, in turn, a better quality of life for its citizens. into reserves. Society’s expectations have changed. We have seen In this regard we are improving efficiency in the use of our this on the horizon for some time, but it became operational assets, with maintenance strategies that ensure rather evident at the end of the year. At Codelco, continuity of operations. We are implementing more demanding we are clear a that today more than ever we must and longer-term productivity practices, while reinforcing the strive to improve our results, increase efficiency and quality and efficiency of services in the supply area. productivity, teamwork and redouble our efforts to deliver Chile more and more surplus. Moreover, we We also began to optimize the design and construction must be aware that no production goal is above the standards on our projects (especially structural projects) safety and care of our people. The country requires while, in parallel, supporting the capture of the potential of our contributions so that the State can respond to Codelco’s vast geological resource base. CORPORATE PROFILE 2019 CODELCO ANNUAL REPORT 5 Our core enablers lie in the strengthening of our that belongs to all Chileans. Ethical standards that do Our challenge today is to reinforce our transparency and organization, managing critical talents and changing not rise to this challenge also put Codelco’s future at integrity regulations within all areas and personnel. With leadership. Our strategy also includes discipline in terms of risk. Therefore, our executives, professionals, workers Our challenge today this objective in mind, we designed a comprehensive safety and operational health, the preparation of optimized and administrators have a duty to act in an accountable plan for dissemination, training and education to sustainability standards and the adoption of current and transparent manner. is to reinforce our generate greater awareness that this task is a key technologies and innovative development in mining. transparency and responsibility of each and every one of us who work in Every time one of us flouts these principles, our progress this company. In parallel to this profound transformation plan, the board is called into question and it takes a heavy toll on our integrity standards of directors remains committed to raising our standards reputation. This is a problem of enormous proportions to all areas and These improvements to aspects of governance seek of good corporate governance, integrity, management with additional complexity: all the institutions are being to ensure that decisions to define Codelco’s strategies oversight and transparency, while applying the strictest questioned. Only with irreproachable conduct and zero personnel”. and to control, self-monitor and audit our work are made controls to the company. tolerance towards a lack of business ethics can we exclusively in the interest of Chile. regain public trust. Codelco is probably one of the companies that is subject I am convinced that Codelco deserves to be managed to one of the most varied and extensive auditing models Over the last 10 years, since approval of our the control environment and have clear roles and by a corporate government and a administration that in the country. The Corporation is audited by the Comisión company’s Corporate Governance Act in November responsibilities. It provides us with a unique method is committed to strategic business planning and del Mercado Financiero as an open stock company, which of 2009, the efforts made by different directors and to identify and manage events that may negatively raising its standards of integrity, transparency and requires high standards regarding continuous submittals the administration to provide the company with an impact the achievement of our goals. management oversight, with the aim of ensuring the of transparent and consistent market information. organizational structure, systems and rules that Codelco’s sustainability. In 2020 we will continue along safeguard the process traceability have been evident At Codelco we are also convinced that privileging this path. It is the only way we may fully confront the The company is also supervised by the Comisión Chilena and vigorous. personal interest over those of the company is challenge of projecting ourselves into the future and to del Cobre (Cochilco) which requires us unacceptable conduct. To protect the integrity and continue contributing to the development of Chile for to provide information for its audits, conducting a Thus we have responded to the urgent need to credibility of the organization, we have developed another 50 years. functional review of about 60 to 70 investment projects strengthen self-regulation, which translates into internal regulations that expressly regulate what to do each year. Additionally, the law permits Comptroller corporate rules, procedures, voluntary commitments and what not do under different situations. Our goal is General of the Republic, when circumstances permit it and best practices that bolster professional and ethical to have systems that allow us to identify and manage so, to temporarily and fully assume all or some of the behavior at all levels of the company. conflicts of interest among our staff and collaborating supervisory powers that correspond to this commission. associated, whether real, potential or apparent. In 2019 we approved a policy and a new risk Therefore, the transformation that we are promoting, management and control model, with the aim of making We also updated our Crime Prevention Model and aimed at maintaining our contributions to Chile for at them part of the organizational culture and identity, reinforced our due diligence process, incorporating the least 50 more years, is not only based on a perspective to develop our work proactively and preventively expectations of ethical performance for companies of production levels but also on a perspective of values. and to continuously seek out best practices in our that want to work with Codelco. These mechanisms We understand thatwe must satisfy the expectations that activities. With this common model will help mitigate will help us fight corruption and increase trust, which society