Annual Report 2002

Produciendo Futuro During 2002, world mine copper production reached 10.7 million tons. Of these, 15% were produced by Codelco, which makes it the first copper producer in the Western World. The American continent produces 7.6 million tons of copper a year. The main producers in the region are: Chile, United States, Peru, Canada and Mexico. II Region Codelco Norte Division Chuquicamata Mine Latitude 22.3º South; 68.9º East

Radomiro Tomic Mine Latitude 22.2º South; 68.88º East

III Region Salvador Division Latitude 26.25º South; 69.55º East V Region Andina Division Latitude 33.14º South; 70.26º East

VI Region El Teniente Division Latitude 34.06º South; 70.36º East Divisions Codelco has five Divisions -four mining Divisions and one metalmechanic Division- located between the II and VI Region of Chile. Codelco Norte Division

Located in the II Region, Codelco Norte Division was created on August 1st 2002, by the fusion of the former Chuquicamata and Radomiro Tomic Divisions.

The exploitation of Chuquicamata, the largest open pit mine in the world, started in 1910. It is located 250 Km northeast of Antofagasta and 1,600 Km north of Santiago.

During 2002, Chuquicamata produced 596,743 metric tons of fine copper, with a cash cost of 39.6 c/lb. As of December 31st, 2002, the mine employed 7,286 workers.

Radomiro Tomic started operations in 1997. It is located at 3,000 meters above sea level and at 45 Km of Calama, in the II Region.

During 2002, Radomiro Tomic produced 297,119 metric tons of fine copper, with a cash cost of 32.8 c/lb. As of December 31st, 2002, the mine employed 681 workers.

Salvador Division

Located in the III Region, Salvador Division started operations in 1959 with a smelter and electrolythic refinery. Since 1995, it incorporated an hydrometallurgical line with a production of 25 thousand metric tons of fine copper a year, from its open pit mine.

Currently, the Division exploits sulfide and oxide ores, each at a different copper benefitiation plant. Its main products are electrorefined and electrowinning cathodes, anodic slimes and molybdenum concentrate.

During 2002, Salvador produced 72,819 metric tons of fine copper, with a cash cost of 69.4 c/lb. As of December 31st, 2002, it employed 1,906 workers. Codelco’s mission is to fully develop its mining and related business skills in a responsible and flexible manner, in order to maximize its long-term economic value and its contribution to the country. Andina Division

Andina is located right on the Andean Range, in the V Region, 80 Km northeast of Santiago. It started operating in 1970.

Andina has two mines: Río Blanco, underground mine; and Sur Sur, an open pit mine. Currently, both exploit sulfide ores. Its main products are copper and molybdenum concentrates.

During 2002, Andina produced 218,706 metric tons of fine copper, with a cash cost of 49.7 c/lb. As of December 31st, 2002, it employed 1,154 workers.

El Teniente Division

The world´s largest underground mine, with some 2,400 Km of underground tunnels, is located at 2,100 meters above sea level and 44 Km east of Rancagua, VI Region.

This mine has been exploited since 1904. The exploitation method used is block caving, in which gravitational force aids the mining extraction. Its main products are blister (fire refined) copper, electrowinning cathodes and molybdenum concentrate.

During 2002, El Teniente produced 334,306 metric tons of fine copper, with a cash cost of 40.3 c/lb. As of December 31st, 2002, it employed 5,085 workers.

Talleres Division

It is located in the southern part of the city of Rancagua, VI Region, 80 Km south of Santiago.

This metal-mechanic Division was established in November 1992 with the main functions of mechanical workshop and foundry.

Talleres Division manufactures and repairs mining and crushing equipment and spare parts; as well as casting steel and bronze. Its production supplies local and foreign clients of the mining and metallurgic area.

Index 14 Letter from the Chairman of the Board 24 Joint Strategic Plan 16 Letter from de President & CEO 32 Strategic plan 18 Board of Directors 19 Senior Officers 48 Economic-financial results 20 Highlights 58 Subsidiaries and associations Produciendo Futuro 22 Corporate profile 23 History 76 Financial statements Letter from the Chairman of the Board

Thirty two years ago I started my professional career at Codelco, at the same time that, with the agreement of all political actors, the large scale mining companies

Codelco became the property of all Chileans. Hard times, in 14 which many did not trust the capacity of our technicians, professionals and workers to manage this vital wealth for the national development.

At the beginning of 2002, His Excellency the President of Chile conferred me the honor of appointing me Minister of Mining and, as such, Chairman of the Board of Codelco. I found a fully consolidated company with a clear world leadership position within the copper industry. Notwithstanding this, and in view of the changes and challenges of the sector, I also found a company requiring great modifications and ambitious projects in order to maintain that position. In view of this, Codelco has embarked in its most ambitious project yet to increase its value and, as a consequence, to generate the largest profits of its history. This project is based on the optimization of the mining resources, facilities and equipment, maximization of the potential of its human team and investing in increased low cost production.

In order to achieve this, the Joint Strategic Plan was agreed, in which the workers, the technical and professional staff adopted a commitment to carry out the changes necessary to reach the proposed goals. Thus, all of them as well as the Board are committed to carry forward this plan, which is critical for the future economy of the country.

The year 2002 was a difficult one for the mining and copper industry, as well as for Codelco. In spite of this, the company increased its operating income and, more importantly, was able to continue consolidating its value increase project. We want this income to augment even further in the future and that is what we are working for. We also want the company to continue contributing to the social and economic development of the communities where it operates and that is why we are committed to the Good Neighbor policy. 15 Chile has put in our hands the responsibility of efficiently managing our main industry. The historical results Annual Report 2002 show that we are capable of insuring that we will meet the challenge for the benefit of all Chileans.

I would like to thank the workers, technicians and professionals, as well as the members of the Board of Codelco for their great effort and commitment with the company.

Alfonso Dulanto Rencoret Minister of Mining Letter from the President & Chief Executive Officer

During 2002, we have faced major challenges. We revised our business model and have introduced deep transformations in our organization. At the same time, we were able to achieve demanding investment goals and to generate a higher operating income than the previous year. More importantly, we have set the foundations to maximize the business potential of the Corporation and to thus meet the commitment of doubling its economic value, for the benefit of all Chileans.

Codelco 16 In order to double Codelco´s value we need to optimize the exploitation of our mining resources and our facilities and equipment; to make the most of the creativity, initiative, expertise, knowledge and professional capacity of our executive staff and workers, and to efficiently invest in increasing low cost production. Our challenge is to use the great advantage represented by the fact that all our mines and industrial plants, as well as the major reserves and mining resources available, are all concentrated in few development poles, all of them within Chile.

Our choice has been “Codelco: only one company” and to encourage the “Codelco way to do things”, in order to give rise to a new organization that seeks:

• To centralize strategic thinking and leadership, while decentralizing the operation; • to structure the business from the main components of the value chain, emphasizing the economic optimization of the development and exploitation of the mining resources; • to capture the potential of synergies, harmonizing policies and processes, concentrating activities where there are economies of scale, and encouraging the dissemination and adoption of better practices, and • to encourage the development, reconversion and mobility of its executive staff and workers.

Initiatives such as the merger of the Chuquicamata and Radomiro Tomic Divisions into the new Codelco Norte Division, the shared administrative services, the executive staff development plan, the protocol of stability through competitiveness, the convergence towards a unique model of capacities, the career development and continuous training, are concrete expressions of the ongoing change.

Simultaneously with promoting the change, we have accelerated the investment plan. During the year we invested in the order of US$ 850 million in mining projects, a figure that is among the highest of the last decade. To partly finance this investment and to take advantage of the low interest rates, we placed long-term bonds for US$ 165 million and US$ 435 million in the local and international capital markets, respectively. In both cases, the demand for these bonds greatly exceeded our expectations and we obtained exceptional conditions. In view of the complex scenario of the international market, we fostered a policy of inventory control and stabilization, aimed at preventing their growth. In late 2001 we announced that we would revise our mining plans and that, as a consequence, would decrease our programmed production for 2002 in 106,000 tons of fine copper, a commitment which we have respected.

The weak economic recovery and the great uncertainty regarding its evolution led us to strengthen our inventory stabilization policy. For this, in November 2002 the Board decided to earmark 200,000 tons of fine copper of our 2003 production as a stabilizing stock. In announcing this decision, we made a commitment to store this material in our own facilities and not to put it in the market while the sum of the accumulated inventories of the London, Shanghai and New York Metal Exchanges remains over the 800,000 tons of fine copper.

Together with fostering an inventory stabilization policy, we reinforced our participation and support of the International Copper Association (ICA) and we assumed the Chairmanship of its Board. In this office, we have fostered a revision of the organization, staff and mid-term strategic plan. The aim is to transform ICA into a global, highly efficient organization that is capable of formulating and putting into practice programs and initiatives to defend and to aggressively promote copper use, to encourage the development of new uses, taking advantage of the unique properties that make copper an environmentally friendly material, essential to life and efficient use of energy.

Early in 2001 we approved and published Codelco´s environmental policy. There we made a commitment to obtain, in 2003, the ISO 14001 certification for all our Divisions and the Corporate Head Office. During 2002 we made significant progress towards this goal. As of this moment, the former Radomiro Tomic Division and Andina Division have certified, and the remaining Divisions, including the Head Office, successfully passed the pre-certification.

Changes of such magnitude as those in which Codelco has been embarked in the last time breed resistance, uncertainty, tensions and 17 Annual Report 2002 errors. We were no exception to the rule, and we have undergone difficulties and misunderstandings. Certainly the most serious case originated in the manner of approaching the transfer of the Chuquicamata camp to the city of Calama which, in its original form, would have implied major costs for the company. It was necessary to negotiate again with the unions the terms and conditions, seeking to conciliate the budget restrictions with the commitment to provide the workers and their families with housing conditions ensuring a good life quality. It was not easy, but with patience and good will we managed to overcome the differences. Once again, the spirit of the Joint Strategic Plan prevailed and we were able to put the company and the country´s interest first, and to reach an agreement that was satisfactory to both parts.

The year 2002 was a key one for Codelco. It was a year in which we continued advancing in issues of management, operational excellence and development. A year in which we invested not only in projects to increase production or to incorporate new technologies, but mainly in creating the conditions to quickly make the most of value creation potential of the mining resources, the equipment and facilities, the people and accumulated knowledge that we have. Thanks to this effort, we are better prepared to fulfill our pledge of doubling Codelco´s value.

I would like to thank the affection, dedication, commitment and trust with which the executive staff, supervisors and workers have embraced the challenges of change. Now the task is to transform the promise into reality, for the benefit of all Chileans, particularly the many still living in poverty.

Juan Villarzú Rohde President & CEO President Minister of Mining Alfonso Dulanto Rencoret Industrial Civil Engineer, Pontificia Universidad Católica de Chile

Director Director Representative of the President Minister of Finance of the Republic Nicolás Eyzaguirre Guzmán Patricio Meller Bock Commercial Engineer, Civil Engineer, Universidad de Chile Universidad de Chile

Director Representative of the President of the Republic Board of Jorge Navarrete Martínez Licentiate in Administrative and Economic Sciences, Directors Universidad de Chile

Director Director Representative of the President of the Republic Representative of the National Chief of the Air Force General Staff Association of Copper Supervisors General Ricardo Ortega Perrier René Valdenegro Oyaneder Aeronautics Engineer, Mechanical Civil Engineer, War Academy of the Air Force Universidad Técnica Federico Santa María

Director Representative of the Copper Workers Federation Bismarck Robles Guzmán Chemical Engineer, Universidad Católica del Norte Senior Officers

President & CEO Juan Villarzú Rohde Commercial Engineer

Senior Vicepresident of Senior Vicepresident of Senior Vicepresident of Senior Vicepresident of Senior Vicepresident of Operational Excellence, Chief of Legal Affairs Human Development and Mining Resources and Strategy and Management Commercialization Finances Development Control Promotion and Waldo Fortin Cabezas Roberto Souper Rodríguez Sustainability Attorney at Law Francisco Tomic Errázuriz Juan Enrique Morales Jaramillo Juan Eduardo Herrera Correa Commercial Engineer Isabel Marshall Lagarrigue Economist Civil Mining Engineer Commercial Engineer Economist and Sociologist

General Manager General Manager Salvador General Manager Andina General Manager El Teniente Codelco Norte Division Division Division Division (Interim) Julio Cifuentes Vargas Germán Morales Gaarn Rubén Alvarado Vigar Francisco Tomic Errázuriz Civil Mining Engineer Civil Mining Engineer Civil Chemical Engineer Economist Highlights

Income before tax and copper price Personnel and productivity Million US$ Income Copper price ¢/lb Number of workers Personnel Productivity mft/worker 1,200 120 19,000 100 1,000 100 18,000 90 800 80 600 60 17,000 80 400 40 16,000 70 200 20 0 0 15,000 60 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002

Financial performance (US$ million) 1998 1999 2000 2001 2002

Sales 2,730 2,944 3,610 3,588 3,490 Codelco 20 Income before tax 355 572 753 412 369 Contributions to the Treasury 355 269 702 370 326 Total assets 5,823 5,817 5,819 6,120 6,733 Total liabilities 3,127 3,035 3,042 3,411 4,000 Equity 2,696 2,782 2,777 2,700 2,733 Investment 670 356 504 472 713

Copper production (*)

Thousands of metric tons 1,501 1,615 1,612 1,699 1,630

Personnel (as of December 31st)

Company personnel 18,258 17,313 17,349 17,166 16,907 Operating contractors 9,595 9,346 10,786 13,773 14,140 Investment contractors 6,307 3,807 5,410 5,346 12,450

Average copper price (c/lb) LME grade A cathodes 75.0 71.4 82.3 71.6 70.6

(*) Includes Codelco´s share in El Abra

Administration Corporate profile The higher conduction and overseeing of the company correspond to the The Corporación Nacional del Cobre de Chile, Codelco, is the first world producer of copper and Board of Directors, formed by the one of the most profitable companies in the industry. It has assets for US$6,733 million and an equity following persons: The Minister of Mining, who acts as of US$2,733 million, as of December 2002. Its main commercial product is the grade A copper Chairman of the Board. cathode. The Minister of Finance. Three Directors appointed by the Codelco generates more than 17% of Chilean exports and it produces close to 3% of the Gross President of the Republic. Two directors appointed by the Domestic Product, GDP. It carries out its operation through four mining and one metal-mechanic President of the Republic and Divisions located in Chile: Codelco Norte –composed of the Chuquicamata and Radomiro Tomic proposed by the organizations of workers and supervisors of the mines– Salvador, Andina, El Teniente and Talleres. It also has ownership participation in important company. The Executive President is mining operations, such as El Abra, with 49% share, and in other mining societies aimed at geological appointed by the Board and his exploration both in Chile and abroad. function is to manage the company. The profile of big world producer gives the Corporation five great strengths of competitiveness in the international market:

Leadership presence. Codelco is the main producer of copper in the world, with 1,630 thousand tons of fine copper during 2002 -including its participation in El Abra-, which corresponds to 15% of the production of the Western World. Codelco is also the second world producer of molybdenum.

Cost efficiency. The Corporation is one of the producers with lowest cost in the industry. During 2002, its cash cost was 40.9 cents per pound. Codelco 22 Copper reserves. The company controls close to 20% of the total copper reserves identified in the planet. The current reserves of the Corporation have a projection of more than 70 years of exploitation at the present production levels.

Stable and geographically diverse clients. Codelco has developed long term commercial relationships with stable and diverse clients. Among them manufacturing companies that are leaders at the international level. To maintain and to develop this commercial portfolio, the company has 4 Budget subsidiaries and 19 sales representatives around the world. Codelco´s annual budget is approved by a Supreme Decree issued jointly by the Ministries of Financial strength. In 2002, the EBITDA reached US$1,039 million. Mining and Finance.

Creation and legal framework Overseeing Codelco is audited by the General Codelco is a State owned mining, commercial and industrial company, created by Decree Law Comptroller´s Bureau through the Nº 1,350 of 1976. The company relates to the Government through the Ministry of Mining. It is ruled Chilean Copper Commission. by the common law, except in those aspects where this is not compatible with the said Decree. The Corporation is registered in the Register of Securities of the Superintendence of Values and Securities Nº 785, and it is subject to the Law on Security Markets, and it must issue to the Superintendence and the public in general the same information that private open societies must issue. History

Mining has a long tradition in Chile. In the first half of the XIX century, copper was one of the main Chilean exports. At the beginnings of the XX century, several North American companies started investing in El Teniente, the largest underground mine in the world, and Chuquicamata, the largest open pit mine in the world.

Between 1925 and 1960, the Chilean Government increased its participation in the large scale copper mining. In 1951, the Washington Convention was signed, which gave Chile 20% of the copper production to be sold in the conditions that it deemed more convenient.

Four years later, in 1955, the Chilean Senate issued a number of laws on copper mining taxation aimed at ensuring a minimal income to the Chilean State and to encourage greater investment of the large mining companies.

On May 5th 1955, the Copper Department was created. Its was the first State entity in charge of overseeing and participating in the international copper market. Among other functions, this Department authorized copper exports as well as the imports required by the copper producing companies. The “Chilenización” In 1966, Law Nº 16,425 was issued, which authorized the creation of mixed societies between the State and foreign copper companies. In such societies, the State had to own at least 25% of the deposits in hands of the foreign companies.

In 1967, El Teniente, Chuquicamata and Salvador became mixed societies: 51% of Codelco and 49% of Braden Copper Company (El Teniente) and 49% of Anaconda Copper Company (Chuquicamata, Salvador). 23 Annual Report 2002 In the case of Andina and Exótica, the conversion to mixed societies was different. In 1967, 25% of Andina went to Codelco and 75% to Cerro Corporation; and for Exótica, 25% went to Codelco and 75% to Anaconda. The Nationalization In 1971, through the amendment of Article 10 of the Constitution, concerning Property Rights, copper nationalization was established. A transitory disposition was added to this Article, stating that as demanded by national interest and in exercise of the sovereign and inalienable right of the State to freely use its wealth and natural resources, the foreign companies forming the great copper mining, including for this effect the Andina Mining Company, were nationalized and incorporated to the full and exclusive dominion of the Nation.

By means of this constitutional amendment, unanimously approved by the Chilean Congress, all the assets of foreign copper producing companies in Chile were transferred to the Chilean State, which took immediate possession of the existing facilities.

On April 1st 1976, the Corporación Nacional del Cobre de Chile, Codelco Chile, was created by Law Decree Nº 1,350. The company grouped the existing mines into one mining, industrial and commercial company, of indefinite duration, legally recognized, with its own assets, and which relates to the State through the Ministry of Mining.

The main objective of this administrative transformation was to continue the exploitation of the nationalized deposits, facilities, operations and related services.

A period of progress in the implementation A new organization Achievements of the commissions The Codelco seal

Joint Strategic Plan Future vision. Codelco, 100% State owned company, will be world leader in competitiveness, fully developing the potential of its people and businesses, and gaining a strong world presence. Joint Strategic Plan A period of progress

The Joint Strategic Plan faces the challenge of doubling the value of the Corporation, working efficiently and incorporating 27 Annual Report 2002 technological innovations as well as improvements of management techniques. This challenge offers a double opportunity: to develop the full business potential of Codelco and, at the same time, the talent of its workers, technical and professional staff.

During 2002, the Joint Strategic Plan established the tools required to advance in the achievement of its goals, on the basis of the same participative working style that characterized during 2001 the design and guidelines that made it possible.

A new organization In late March, the Board of the Corporation approved a new organization model, focused in three major lines: a Corporate Center, devoted to strategic issues; the creation of Codelco Norte Division –by the merger of the former Chuquicamata and Radomiro Tomic Divisions– with the objective of capturing, through the integrated management of the resources and facilities, the great value potential of Codelco in the II Region; and the decision to advance in the development of a corporate network of Shared Services, which includes the areas of Information and Telecommunication Technologies, Financial Auditing and Procurement. Codelco 28 The essential foundations of this new organization are:

• To strengthen the capacity for strategic thinking and action. • To identify and to reinforce the main business components, our mining base and the promotion of copper. • To consolidate Codelco as one big company, properly balancing the necessary decentralization of its operations with the corporate management of the activities and processes in which centralization and technology make significant savings possible.

Achievements of the commissions In March, the participative work of the commissions -formed by representatives of the administration and of 29 the unions of workers and supervisors- achieved important Annual Report 2002 and expected goals through the signing of two protocols.

Protocol Nº 1. This agreement of Labour Stability with Competitiveness ensures that the jobs generated by the setting in motion of the new organization should preferentially be given to available personnel of the Corporation. On the basis of this agreement, during 2002 took place the first process of internal mobility of workers from the Salvador and Talleres Divisions to Andina Division.

Protocol Nº 2. This agreement on Union Organizations and Individual and Collective Relationships in the New Organizational Structure guarantees that the new organization of Codelco will not affect the design or structure of the unions. Also, the Commission on Life Quality reached agreements on the Virtual Community and Alcohol and Drugs projects. The first is aimed at improving the welfare of the workers and their families through integration to the Internet network, and at creating a web site offering educational and entertainment content. The Alcohol and Drugs project, to be developed jointly with the National Corporation on Drug Control (CONACE, in its Spanish acronym); the International Labour Organization, ILO, and the Panamerican Health Organization, PHO, seeks to develop a corporate prevention policy, focused on both the hazards of the use of such substances and the counseling for rehabilitation.

During the period, the Commission on Personal Development started a plan of labour and professional career with the executive assistants of the Head Office. The initiative will be repeated in all the Corporation and throughout the professional levels. Also, significant progress was made in designing the position structure on which such career development will be founded. In this regard, the more than 2,800 positions currently existing in the Corporation could be reduced to 300. Also, during 2002 there were more than 1,160,294 hours of training in the technical, personal development and life quality areas.

Late in 2002, the new Corporate Management of Shared Services was launched, an initiative that is directly related to the mid-term and long-term viability of the Corporation. Indeed, the necessary optimization of the internal management requires a new model for the company to work as a whole, on the basis of the principles of the Joint Strategic Plan.

Codelco 30 Development of the Executive Staff of Codelco

The successful implementation of the Joint Strategic Plan requires certain conditions, one of which is to have a Corporate Executive Staff of international level. 31 Annual Report 2002 For this, during 2001 a project was designed to ensure the capacity required to lead the entire Corporation towards its goals. During 2002, significant steps were taken in this direction:

• An ideal executive profile was defined through the Management Excellence Model of Codelco. This model The Codelco seal identifies the capacities required of these professionals, according to their working position and decision-making During 2002, another important progress of the Joint level, in order to face the future challenges. Strategic Plan was the development of a participative management model that will consolidate a distinctive • All the company executives and a group of working style, a Codelco seal, allowing to reach high professionals with executive potential (a total of 230 persons) were evaluated against the model, in order to quality standards within the industry. estimate the effort that will be required.

This Management System of the Corporation seeks • The development work proper was started. That is, to collect and to incorporate the best corporate closing the gaps identified in the evaluation with the practices, through in line planning, the management preparation of an individual development commitment. of processes and of knowledge.

During 2002, the system structure was established; the planning tools and guidelines were developed, and it was defined how process improvement will be carried out.

Investment and projects Sustainability and environment Technological research and innovation Commercialization

Strategic plan In order to double Codelco´s value we need to optimize the exploitation of our mining resources basis, our facilities and equipment, and to fully develop the creativity of our workers. Investment and projects

Within the framework of the Joint Strategic Plan, the Corporation considers projects of expansion of the 35 production and treatment capacities, process Annual Report 2002 improvements, technological developments, solution to environmental problems, equipment and facilities replacement, and development of infrastructure. Also, the investment portfolio includes studies to back up possible development alternatives.

During 2002, Codelco invested US$713 million in a portfolio of 464 projects. The breakdown by objective is shown in the following table.

Investment 2002 (US$ million)

Development projects 418 Equipment replacement and facility repairs 113 Environment and occupational safety 118 Research and studies 42 Exploration 23 TOTAL 713 Calama Integration It follows a description of some of the more relevant investment activities and studies on alternatives for new Project projects making possible divisional development above the current levels. The main objectives of the project of Codelco Norte Division integration to the city of Calama are: to transfer to new housing some 2,600 On August 1st 2002, the Codelco Norte Division was created from the merger of the former Chuquicamata and workers, 700 supervisors and their Radomiro Tomic Divisions. The fundamental reason for its creation was to develop this mining district in an integral families; to comply with the environmental regulations; to improve fashion and being able to take advantage of synergies that may optimize production. the life quality of the workers and families, and to support the The Business Plan of Codelco Norte integrates the planning of mining resources and reserves of the current transformation of Calama into a modern city. operations; the mining projects with an advanced state of knowledge, and the geological resources being recognized in the district area. Therefore, the new Division includes the Chuquicamata, Radomiro Tomic, Mina During the second semester of 2002 Codelco and Codelco Norte Division Mansa Mina Sur and Mansa Mina deposits, together with the deposits included in the Toki cluster (Opache, Genoveva and faced the reformulation of the project Toki). of transfer and integration to Calama. The Mansa Mina project is located between Chuquicamata and Calama, 6 Km from this The reformulation and correction of the In this phase, the integrated Business Plan for the mining resources of the district considers a consumption project involved the identification of the city and at 2,400 meters above sea level. It errors, mainly located in the process of corresponds to the exploitation and strategy of the reserves for the current process facilities, adding to them the more evident projects with higher management and organization of the beneficiation (mine, concentration, concentrate rentability. This implies capacities in the order of 210,000 tons/day of mineral for the sulfide line, and of approximately housing demand. treatment) of the ores of the Mansa Mina sulfide 530,000 tons of fine copper a year for the oxide line (LX-SX-EW). deposits, containing mineral resources Codelco has reasserted its decision to reaching, in its central part, 882 million tons, abide by the commitments with the with a copper grade of 1.092%, 16 grams of Among the projects of the Codelco Norte Business Plan that are currently underway are the following: the workers, as long as this does not imply silver per ton, and 703 ppm of arsenic, for a optimization of the concentrator plants, the increase in smelter competitiveness, the technological change of excessive costs associated to the cut-off copper grade of 0.25%. transfer. For this, a shared solution was the electrolythic refining, the exploitation of the resources of the northern extension of Mina Sur, and the integration sought, harmonizing the existing The available engineering studies indicate the studies to exploit other leachable resources of the district. commitments of the administration with option of open pit exploitation in the upper part the workers, with the available funds. of the deposit to be followed by underground mining in the deeper parts; processing through The Optimization of the Concentrator Plants is a set of initiatives to improve the global treatment capacity of the The administration and the flotation and treatment of high arsenic complex to 182 thousand tons of mineral per day, with a global increase in the recovery of copper and molybdenum representatives of the workers and concentrate by toasting. of 1.5% and 4.6%, respectively. supervisors have, within a context of debate and dialogue, resumed the During 2001-2002, progress was made mainly negotiations in the commission, which in updating the profile engineering, information This group of projects and actions will be applied in the second semester of 2003. The total estimated investment resulted in a new chronogram and the collection for the conceptual engineering and for the main projects of this group is of US$ 86 million. During 2002, US$ 31 million were invested in preparing decision to call a new bidding process the building of the exploration ramp, as well for the housing construction, open to as the studies on how to integrate it to Codelco the benefitiation area for the increase in capacity. Also, the engineering studies were completed, the reception international bidders. Norte Division. of the equipment started and the slag treatment plant was stopped to undergo transformations.

The analysis currently available allows to conclude a high improvement potential of its Regarding the Improvement of Smelter Competitiveness project, the detail engineering and the procurement economic results for an integrated exploitation process were completed and the works associated to the main contracts were started. The total investment of scenario. the project is of US$106 million, of which US$66 million were spent in 2002. The project will reduce sulfur and arsenic emissions to comply with Decree Nº 206. The project is also aimed at improving the competitiveness of the smelter business in the long term. For this, several projects will be put in practice, such as the improvement in capacity of the flash furnace, changes in the associated plants, and investment in the sulfuric acid plants to improve its efficiency from 96.8% to 98%. These projects will be gradually applied during 2003. Regarding the Technological Change in Electrolytic Refinery project, during the period the EPCM contract was awarded, the purchase order for the technological package was issued and some relevant equipment procurement was solved. Of the total investment of US$146 million, US$15 million were spent in 2002. The aim of the project is to transform the current electrorefining process of Refinery Nº 2 to permanent cathodes. This change, together with the increased current density, will significantly increase the capacity to 855 thousand tons a year starting the first semester of 2005, while simultaneously reducing costs.

Also, within the Integrated Business Plan framework the best way to integrate the Mansa Mina exploitation to Codelco Norte Division is being analyzed and evaluated.

Salvador Division The main project underway at this Division is the Technological Change and Expansion of the Potrerillos Smelter. In 2002, the reverberatory furnace was discontinued and demolished. The total estimated investment is of US$103 million, of which US$67 million were invested during 2002. The aim of this project is to increase the technical and economic efficiency of the Potrerillos smelter and to meet the goals of the decontamination plan in order to comply with the environmental regulations. The project includes the replacement of the reverberatory furnace with a Teniente converter and the building of new associated facilities. The technological change will 37 allow to increase the capacity to process copper concentrate from 520,000 to 680,000 tons a year. Annual Report 2002

Andina Division The main project underway in this Division is the Mine-Plant Optimization. During the period, the new mineral transportation chute and the modified thickener were put into function and the construction of the pre-crushing plant was started. Of the total investment of US$31 million, US$18 million were invested in 2002.

This project will optimize the whole of the operations, increasing the processing capacity to 71.8 thousand tons of mineral per day starting in mid 2003, through the construction of the new mineral feed chute, a pre-crushing plant and the expansion of associated works.

Currently, this Division is carrying out the final stages of the study of the Expansion Project, initiative on which the development strategy of the six-year period is based. It considers a major expansion of the production capacity through greater extraction from the open pit mines and a new configuration of the milling and floating. With this project, Andina Division seeks to double its annual extraction and processing rate up to an approximate level of 150 thousand tons of ore per day, starting in 2006. The total investment for this project is estimated in US$800 million. During 2002, the basic engineering of this expansion was completed. Codelco 38

Gaby project

The Gaby project is located approximately 100 Km south of Calama. Currently, the Corporation is carrying out the conceptual studies to identify and to define its advantages.

During 2002, the revision of the mining and metallurgical aspects of the project was completed and progress was made in the Environmental Impact Assessment, and on the approval of the hydric resources for the industrial water supply. The project involved an investment, during the period, of US$3.8 million. El Teniente Division Mejillones Smelter and Refinery Project The investment activities of this Division are focused in the Teniente The aim of the evaluations of this project is to establish the best configuration for a modern smelter and refinery complex in the Mejillones Development Plan. The Teniente Development Plan is the generic Harbour, in the II Region. This megaproject will mean a major development name for a number of mining, technological and management potential for the entire region, which will become the area with the greatest economic projections in the country. projects aimed at significantly expanding the production capacity of the Division up to 480,000 tons of fine copper starting in 2004. During 2002, the bankable pre-investment engineering was completed, the Environmental Impact Study was approved by the II Region Corema, and the business model and structure for association with third parties For this, investments are being made in projects aimed at exploiting was developed. new mining areas of the deposit, to adapt and to expand the mineral This project will make possible to increase the concentrate processing transportation capacity, to expand the mineral beneficiation capacity capacity in the existing smelters with marginal investment. This will be in the Colón sector, to increase the fusion capacity of the Caletones achieved by their partial transformation to obtain solid white metal as the final product (72% mean copper content) instead of cast anodic smelter, together with further exploitation of leachable resources copper. and a transformation of the service and supply infrastructure. This white metal produced by the current smelters of Codelco will be sent to the new Mejillones Smelter Refinery, where it will take place its Also, a new concept of organization and management is being conversion to anodes and the electrolytic refining of part of these anodes established, with a modern style that incorporates the Strategic to produce the final cathodes. Alliance as an essential tool and which uses the results of the The Mejillones complex will also process concentrates, for which it will continuous improvement. have a fusion area with a processing capacity of up to 800,000 dry 39 metric tons of concentrates.

The total investment for this set of projects is of approximately The Corporation is developing this project with the aim of structurally US$640 million, US$250 million of which were invested during facing the risk factors for its competitiveness in the smelting and refining business. For this, a business repositioning was decided, involving a 2002. Regarding the progress in the Teniente Development Plan qualitative jump from isolated developments at each of the smelters and during the period, the Board of Directors approved important refineries to an horizontally integrated corporate scheme. This will make possible to capture synergies and to increase significantly the efficiency investments, such as the phase 1 of the Increase in Smelting and value of the Corporation. Capacity, the completion of the detail engineering and the setting This increase in value is founded on the integration of the current smelter in motion of several individual projects. Over the projected capacity, and refinery units, through the introduction of technological breakthroughs the Division is currently studying additional development alternatives for large production scales. that could mean an expansion of the mine-beneficiation up to 150 Furthermore, the location in Mejillones offers major advantages, such thousand tons of mineral per day. as harbour infrastructure, availability of power supply, easy access to natural gas, and proximity to the copper producing centers of the II Region, among others. Besides the projects described for each Division, during 2002 the Corporation continued analyzing different options, such as the Gaby The project considers an approximate investment of US$1,200 million, to be partly financed by the incorporation of partners. In developing this project and the Mejillones Smelter and Refinery project. business with third parties, Codelco wishes to keep the control of the operational decisions of the new Mejillones Smelter and Refinery.

During 2002, the best association structure for the incorporation of strategic partners was developed. Also, initial surveys looking for possible partners were carried out, which showed a high degree of interest among important actors in the industry. Sustainability and environment

The commitment of Codelco with sustainability is reflected in a management aimed at achieving profitability on the invested capital, the protection of the environment, and the acceptance and respect for the community.

As expression of this commitment, during 2002 the Principles of Sustainable Development of Codelco were adopted. These principles underscore how important for the Corporation and its workers are issues such as the following: the respect for human rights; the contribution to the social, economic and institutional development of the communities in which it operates; the contribution to the environment and biodiversity, and the existence of transparent information and communication mechanisms, among others.

As part of the activities carried out in the ecological Los Cobres de Loncha hacienda, owned by El Teniente Division, Codelco started in 2002 a process of dialogue with the communities and the local authorities in order to define the best way in which the project could contribute to the sustainable development of the neighbouring communities. In this dialogue, the company also informed on the content of the hacienda project and on how is being carried out. This hacienda, with almost 23 thousand hectares of extension, will be the first ecological mining project in Chile. Codelco 40 Codelco continued with its policy of environmental investment, which reached US$118 million in 2002. Such investment went to projects that made significant contributions to the environmental performance of the Corporation, mainly concerning the capture and treatment of atmospheric emissions, the control and treatment of liquid wastes, and the adequate management of solid wastes.

During the period, all the Divisions made efforts to meet the goal of implementing an Environmental Management System and to certify it under the ISO 14001 standard. In this line, Codelco Norte Division maintained the ISO 14001 certification for the operations of the former Radomiro Tomic Division, approving its first maintenance audit in 2002.

In December 2002, Andina Division certified its Environmental Management System under the ISO 14001 standard, being the second Division of the Corporation to certify its operations, after Radomiro Tomic, in 2001. Also in December, the Codelco Norte –for its former Chuquicamata operations– Salvador and El Teniente Divisions as well as the Head Office, all had pre- certification audits, which were all approved. These audits were carried out within the framework of activities aimed at achieving ISO 14001 certification of the entire Corporation in 2003.

During the period, the Andina and Salvador Divisions signed voluntary agreements of environmental remediation and management, worked out with the environmental authorities, which will operate until December 31st 2005.

At Andina Division such agreement consolidates the task of a Working Group, which identified and set priorities for the main environmental problems of the 41 Division. The agreement defined commitments and Annual Report 2002 activities for the Division to carry out in order to solve the 14 environmental situation with the highest priorities.

Also, the agreement of Division Salvador is aimed at identifying and prioritizing the significant environmental aspects, establishing a working plan and putting into practice the solutions agreed with the environmental authorities.

These voluntary agreements, together with the one signed by El Teniente Division in 2001, are pioneer cases in Chile and they prove the commitment of the Corporation with the environment beyond the existing regulations. Mining exploration

During 2002, the Corporation had relevant achievements in its exploration program both in Chile and abroad. In Chile, the existence of important resources in areas close to Codelco Norte Division was confirmed, and two new mineral bodies in the II Region were incorporated. In 2002, the investment in geological exploration reached US$23 million, some 38% greater than the previous exercise. This investment was aimed at Chile and the consolidation of the programs in Mexico and Brazil.

During the period, emphasis was put on drillings –definitive exploration tests– with some 177,000 meters of drilling, 90% more than in 2001. Most of this effort was aimed at the advanced programs and the confirmation of the two new discoveries.

As added value creation, the explorations developed two projects on knowledge management. These were the implementation of the Practice Communities and the development of a Geographic Information System, at the national and international levels, aimed at integrating the knowledge of the organization and its fluent application to exploration.

Chile During 2002, the concept of cluster as identifying a group of mineralized bodies was confirmed. This is the case of the Toki cluster, formed by the Genoveva, Opache and Toki deposits, which contributed with inferred resources in the order of 9 million metric tons of fine copper. These resources were incorporated to the integrated planning of the new Codelco Norte Division.

Codelco 42 Also, two new mineralized bodies were discovered: the exotic copper body called Vicky, in the district of the Gaby deposit, with potential estimated resources of 80 million tons of oxide ore with a copper grade of 0.6%; and the porphyric copper deposit called Quetena, close to the Toki cluster, containing potential resources for 490 million metric tons, with a copper grade of 0.4% of which some 200 million tons correspond to oxides.

Concerning the identification of opportunities with third parties, associations were established in which Codelco will be the operator. These are high potential prospects, with deposits of the Candelaria type, located in the III and IV Regions.

Concerning the Río Hurtado prospect –association of Codelco with Barrick Chile – the results are promising for the exploitation of a system of deep porphyric copper.

Investment and drillings

Thousands of US$ Meters Investment Drillings 50,000 180,000

40,000 150,000 120,000 30,000 90,000 20,000 60,000 10,000 30,000 0 0 1995 1996 1997 1998 1999 2000 2001 2002 Mexico The Pecobre company –association of Codelco with Industrias Peñoles of Mexico– completed its third year of exploration of porphyric copper in covered areas in the State of Sonora. The program maintained an important drilling rate, 19,170 meters of drilling, distributed in 6 targets and 2 ore bodies, with a total of 54,000 meters drilled so far.

The work of the year allowed to confirm the discovery of Tecolote, a low grade oxide ore body, and to outline the Los Humos project, 300 million tons of leachable resources, with a copper grade of 0.3%. In both cases, during 2003 efforts will be continued to try to increase the grade in order to improve the economic profile.

Brazil In this country, the organization of explorations was consolidated through the Codelco subsidiary Codelco Do Brasil. The infrastructure and logistics making possible exploration activities were established, and the first 8,100 meters of drilling were completed in two projects located in the Amazonas.

The activities were focused on the Gradaus project –joint venture with Barrick– located at 150 Km of the Carajás area; and on the Rondonia project –joint venture with the local Santa Elina company– located in midwestern Brazil.

The need to have a balanced prospect portfolio led to the preparation of a generative program for the development and identification of opportunities and areas of prospective interest, the basis on which the future exploration plan will be outlined. 43 Annual Report 2002 Peru In view of the favorable reception of the Peruvian Government authorities to Codelco´s activities in Peru, business opportunities with several local and foreign mining companies were evaluated as to the formation of exploration associations, one of them with the Canadian company Cambior to explore in the northwestern part of Peru.

Exploration associations Projects in Chile Partner Type Yabricoya Cominco (Canada) Copper Purén Mantos de Oro (Canada) Gold Sierra Mariposa Placer Dome (Canada) Copper Río Hurtado Barrick (USA) Copper/gold Paloma Newmont (USA) Copper Vallenar Cemento Bío Bío (Chile) Copper

Projects abroad Partner Type Estado de Sonora Peñoles (Mexico) Copper Gradaus Barrick (Brazil) Copper/gold Rondonia Santa Elina (Brazil) Copper/gold Technological research and innovation

During 2002, Codelco reaffirmed its conviction that technology is a an essential requirement for corporate competitiveness, by investing US$20 million in Technological Research and Innovation. This investment represents a 30% increase as compared with 2001.

The Technological Research and Innovation activities developed during 2002 were focused on the Corporate Technological Programs for Continuous Underground Mining, for Mining Processing and Pyrometallurgical Processes, and on high impact projects in Hydrometallurgy.

The Corporate Technological Program for Continuous Underground Mining focused on large scale industrial tests in Andina and Salvador Divisions, including developments in the pre-conditioning of the rock mass by precise blasting and

Codelco hydraulic fracturing. Also, studies were developed on the identification and 44 conceptualization of continuous mineral extraction and transportation technologies.

The International Caving Study, a consortium of the ten main underground mining companies of the world, participated in these studies. Also, collaboration agreements were signed with the German company DBT, experts in mining equipment for the coal industry. Alliance Copper Ltd. Alliance Copper is a society between The Corporate Technological Program for Mineral Processing, carried out jointly Codelco and BHP-Billiton aimed at the with the Japanese company Kawasaki, focused on the search for alternatives search for metallurgical mining business opportunities, through the development making it possible to use energy more efficiently in the comminution. Concerning and use of the technology of bioleaching the program to increase recovery of copper in the flotation process, it was carried of concentrate. This technology makes out in collaboration with the Australian company British Oxygen Corporation. possible to exploit deposits with high arsenic content. Also, progress was made in improving the conventional and SAG milling processes, During 2002, the development of the project of high impact on the treatment capacity and cost reduction, in the optimizing to build a prototype bioleaching commercial plant in Chuquicamata was started, with automation of processes, and in the technological development of the flotation an investment of US$56 million. The plant of fine and ultrafine minerals. will have an approximate capacity of 20,000 tons of copper a year. The detail engineering of the project had made more than 90% progress as of December, and the construction is advanced in more than 40%.

It is expected that in October 2003 the technology validation program will be started with concentrates from Chuquicamata and Mansa Mina. IM2

In order to face the innovation challenges and to improve its competitive positioning, the Corporation created in 1998 the Institute for Mining and Metallurgical Research, IM2.

Currently, the IM2 has a staff of 25 highly qualified professionals with industrial The Corporate Technological Program for expertise, and it has offices in Rancagua, Calama and Santiago. Its innovation activity has shown sustained growth, participating in some 30% of the total Pyrometallurgical Processes focused the efforts in technological, research and innovation activities of Codelco. attaining continuous operation, from the fusion to

During 2002, the IM2 developed a portfolio of 110 projects, permanently incorporating the anode fire refining stage. During the period, ideas and implementing these projects with the divisions. Of this total, 67 are industrial scale validations of slag cleaning and white currently underway, with emphasis on hydrometallurgy (21%), pyrometallurgy metal to blister conversion were carried out. Also, (19%), mineral treatment (14%), and continuous underground mining (7%). a laboratory scale test for a process of direct The IM2 also participates, with the Corporation and universities, in the following production from concentrate to blister was positively Fondef projects: “Complex systems: an application to the planning of the Codelco Norte exploitation”, “Models of gravitational fluxes of mineral applicable to evaluated. underground mining”, and “Models of dynamic interfaces in copper fusion, conversion and refining phenomena.” In Hydrometallurgy, efforts were focused on the treatment of complex oxide ores, such as those of Concerning intellectual property, the IM2 has filed six patent applications in the year, with the aim of protecting the high impact innovations in the areas of Damiana and San Antonio, Salvador Division, and underground mining and pyrometallurgical processes. on establishing the technological and process foundations for the leaching of low-grade ores by BioSigma S.A. Run of Mine, ROM.

In 2002, Codelco, jointly with the Japanese company Nippon Mining & Metals Co. Also, a pilot scale evaluation of the Codelco-IM2 45 Ltd., formed BioSigma S.A. The new company is aimed at developing knowledge Annual Report 2002 in genomics, proteomics and bioinformatics of microorganisms for mining, and technology of integral effluent treatment was carried to create business opportunities through their industrial application in biomining. out. This technology will make possible to jointly

BioSigma was formed with an initial capital of 3 million dollars, two thirds from process the effluents from the acid plant, the refinery Codelco and the remaining third from Nippon Mining & Metals; also, the company wastes, and the smelter dusts. It was possible to took on the management of other US$2 million contributed by Corfo (FDI) and dissolve and to precipitate arsenic in the stable form Conicyt (Fondef) within the Genoma Chile Initiative, promoted by the Technological Development and Innovation Program of the Chilean Government with the of scorodite, which can be disposed of in compliance Interamerican Development Bank (IDB). with the waste disposal regulations.

The first activity of BioSigma was to carry out an international call for proposals for funding, in which scientists from the 45 IDB signatory countries could participate. Twenty one proposals from resarch consortia from 10 countries were received. With the assistance of an International Selection Committee, four projects were chosen, corresponding to teams from universities of Japan and Chile.

BioSigma developed a plan which includes the bio-identification of specific microorganisms, the development of technologies to produce their biomass and the identification of the genes coding for proteins that accelerate the bioleaching of copper sulfides.

In the mid-term, it is expected that BioSigma produces and commercializes from simple technologies to improve current processes, to more advanced solutions through cloning or the development of bacteria designed to increase mining productivity. Among the relevant objectives of the company is to generate property rights on technologies that can be applied to large scale mining and to give economic value to the existing low-grade mineral resources.

The commercial production of such technologies would open a huge development potential, by allowing to exploit low-grade resources available in Chile with low cost and environmentally sustainable procedures. Commercialization Market development In 2002, the physical sales of own and third parties copper reached 1.9 million fine metric tons, 6.5% lower than in 2001. As in previous years, Codelco´s commercial policy was based on giving priority to sales of refined copper to fabricators or producers of semi-manufactured copper products. This corporate interest is based on the need to have clients who are true long-term strategic partners, to ensure a continuous presence of Codelco in the different regional copper markets.

Concerning copper by-products, in the last few years Codelco has consolidated itself as world leader in the production and sales of molybdenum. In 2002, the company produced 19,901 metric tons of molybdenum, a figure representing 15% of the world production.

New market Codelco has followed very closely the process that has been undergoing China. Approximately six years ago, the Corporation began a strategy to strongly increase its participation in that market. Currently, has managed to clearly become the leader company in copper sales in China.

In November 2002, the Corporation opened a representation office in Asia, in the city of Shanghai, which main purpose it is to increase the proximity of Codelco to its clients. This should help to consolidate what has been achieved and to face more vigorously the coming challenges.

Codelco 46 Copper concentrates Concerning the unrefined copper products, the company policy is to maximize its use in its own facilities. Therefore, the main objective is to supply the smelters with concentrate and the refineries with anodes, and then to establish the surplus to be commercialized.

In terms of copper concentrate, during 2002 Codelco sold approximately 3.2% of the total commercialized in the world, giving priority to those markets of greater income for the Corporation, such as Chile, Brazil, China and India.

Refined copper The evolution of the world economy, much weaker than expected, led Codelco to reduce the production plans of mine copper of its Divisions in 106,000 tons during 2002, decreasing the availability of copper in the markets.

In late 2002, the Board decided to earmark 200,000 tons of refined copper from the 2003 production as an stabilizing stock. Codelco made the commitment to store this material in its facilities and not to offer it in the market while the sum of the accumulated inventories in the London, New York and Shanghai Metal Exchanges remains above 800,000 tons of refined copper. International Copper Copper sales by region 2002 Association, ICA (percent distribution) On May 31st 2002, the Executive President of South America 11% Asia 45% Codelco, Juan Villarzú, assumed for two years the North America Chairmanship of the Board of the International 14% Copper association, ICA. The main challenge of this office will be to meet the goals of the strategic plan, which include to increase copper demand, as a minimum, by 1% above its natural growth, by the year 2005.

Furthermore, Codelco decided to reinforce one of Europe 30% the main strategic lines of the ICA, the technological initiative for the development of new copper uses, through the contracting of a director and the funding of a high potential project in the automotive industry. Also, it re-focused the program on efficient energy use, for which it formed a committee chaired by Codelco.

In the process of restructuring the different regional ICA organizations, it is worth mentioning the work carried out by the Latin American Committee, chaired by Codelco, which approved a proposal that has been backed by the boards of the local Main copper organizations. clients of Codelco Simultaneously with the work of ICA, Codelco is • Nexans working internally in developing market intelligence • Taihan Electric Wire Co.Ltd • L.G. Cable Ltd. initiatives, aimed at sensitizing and orienting the • Shanghai Industrial Foreign Trade entire organization towards the needs of the markets • Pacific Electric Wire and Cable and clients. • Halcor Metalworks • Colata Continua Italiana S.P.A. • Km Europa Metal AG • Walsin Lihwa Corporation • Poongsan Corporation • Southwire Company Inc. • Umicore S.A.

Income and contributions to the Treasury Costs Production and sales Productivity Human resource management Risk factors Insurance

Economic-financial results During 2002 we were able to meet demanding investment goals and to generate a higher operating income than the previous year. Income and contributions to Income and copper price US$ Million Income Copper price ¢/lb the Treasury 500 80 70 400 The concept of income corresponds to the results before the income tax, 60 extraordinary items and minority interest and before Law Nº 13,196, which 300 50 requires a 10% contribution on the foreign currency returns for the sale abroad 40 of the copper production, including by-products. 200 30 20 100 The income generated by the Corporation during 2002 reached US$369 10 million, a figure lower than the US$412 million of 2001. 0 0 2001 2002 The exploitation income reached a level of US$3,490 million, a figure 4.6% lower than that of 2001, mainly the effect of lower sales –in metric tons– equivalent to an 8.6%, counterbalanced by a better price for the Codelco mix, 2.7% higher than the 2001 price.

The exploitation cost for 2002 reached US$2,787 million, a 4.6% lower than in 2001. This result was affected by a lower amount of copper bought to third parties.

As a consequence, the exploitation result for 2002 was of US$543 million, 2.6% higher than that of 2001. 51 During 2002, the EBITDA was of US$1,039 million, compared with US$986 Annual Report 2002 million for the previous year.

In 2002, the contributions to the Treasury reached the US$326 million, compared with the US$370 million of the previous year, according to the following detail:

Contributions to the Treasury (US$ million) 2001 2002

Income tax 3 80 Law Nº 13,196 257 223 Dividends 102 - Others 8 23

Total 370 326

The reduction of the contributions is a consequence of the lower results and lower sales. During 2001, the dividends delivered to the Treasury were higher than those earned, a situation that occurs in low copper price periods, since the dividends are delivered according to program. The surplus delivered is regularized in future periods. Costs

During 2002, the unit costs of the Corporation reached the following levels: total costs and expenses, 65.6 cents per copper pound; net cathodes cost, 60.3 c/lb; and cash cost, 40.9 c/lb.

Due to the lower production of own copper, the net unit cathodes cost shows a small increase from 58.1 c/lb to 60.3 c/lb.

At the same time, due to the lower production, the cash cost shows a small increase from 40.7 c/lb to 40.9 c/lb.

Codelco Unit costs 52 (¢/lb) 2001 2002 Total costs 61.7 65.6 Net cathodes costs 58.1 60.3 Cash costs 40.7 40.9 Production and sales Production The copper production of Codelco in 2002 was of 1,630,056 metric tons of fine copper, down by 68,922 mtf compared to 2001. The production includes the 49% of El Abra, corresponding to Codelco´s participation in that society. The lower production responds to the decision of the Corporation to reduce its 2002 program.

The average ore grade was 0.91%, compared to 0.97% in 2001. During the 1998- 2002 period the ore grade has decreased in more than 9%.

Production by Division ( metric tons of fine copper)

Copper Molybdenum 2001 2002 2001 2002 Chuquicamata 641,931 596,743 15,219 12,878 Radomiro Tomic 260,336 297,119 Salvador 81,166 72,819 1,575 1,258 53 Andina 253,341 218,706 2,724 1,864 Annual Report 2002 El Teniente 355,600 334,306 4,720 3,901 El Abra (% Codelco) 106,604 110,363 Total 1,698,978 1,630,056 24,238 19,901

Production of copper and ore grade Equipment used in productive processes Thousands of mft Production Ore grade % • 181 Extraction trucks • Molybdenum toasting plant • 19 Electromechanical shovels • Driers 1,750 1.2 • 57 Tractors • Flash furnace 1,500 1.1 • 15 Graders • Modified Teniente converters 1,250 1.0 • 37 Front loaders • Casting and refining furnace • 17 Drillers • Acid plants 1,000 0.9 • Crushing system E • Refinery plants 750 0.8 • Tailings system • Solvent extraction plant • Concentrator plants • Electrowinning plant 500 0.7 • Slag plant • Low grade sulfide leaching plant 250 0.6 • Filter plants • Vat and dump leaching plants 0 0.5 • Molybdenum plants • Oxygen plants 1998 1999 2000 2001 2002 Sales The total income for sales of copper and by-products reached US$3,490 in 2002, US$98 million less than the income of 2001. During the period, 1,934,000 metric tons of fine copper were shipped, both own and from third parties, 7% less than the amount shipped in 2001.

The sales of own and third party copper in 2002 reached 1,581,778 metric tons of fine copper, lower by 153,837 mft than the amount shipped in 2001, which reached 1,735,615 mft.

The income from copper sales in 2002 reached US$2,792 million, in contrast with the US$2,987 million of the previous year. The US$195 million difference is accounted for by US$258 million less due to lower sales, and US$63 million more due to better prices.

The sales of by-products and others reached US$500 million, US$52 million more than the previous fiscal year. Molybdenum, the main by-product, generated income for US$151 million, US$29 million more than in 2001, due to a better price which compensated the lower sales due to lower production.

Around 90% of the copper sales correspond to refined products, cathodes and RAF; the remaining 10% corresponds to unrefined products.

Total income

US$ Million 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2001 2002

Productivity

Productivity Labor productivity Productivity is the ratio between the copper production during a period and the number of workers in the same Mft/worker 2001 2002 100 period. The own and total productivity are shown separately. The first takes into account only the company 90 personnel; total productivity includes also the workers of the contractors. 80 70 60 The average number of company workers in 2002 was 16,967, compared to 17,147 in the previous year. 50 40 Within this framework, and excluding from the calculation the percent of copper production of El Abra, the own 30 20 productivity of the Corporation in 2002 was 89.6 tons per worker, compared to 92.9 tons per worker in the 10 previous year. 0 Total Own Concerning total productivity, this decreased from 53.4 tons per person in 2001 to 49.3 in 2002. Accident rates Human resource Seriousness Seriousness rate Frequency Frequency 1,000 6 management 900 800 5 Codelco is commited to minimizing the negative impact 700 4 600 that its operation may have on people and the environment 500 3 and, whenever possible, to mitigate it or to properly 400 compensate it. 300 2 200 1 100 Accident risk 0 0 The Corporation has given foremost priority to personal 2001 2002 safety, with campaigns in all areas of the company. As a consequence, the accident rates have improved compared to the previous year. The frequency rate of accidents of the company workers in 2002 was 4.4, lower than the 5.0 of 2001. Regarding the severity rate among own workers, it decreased by 47% from 881 in 2001 to 470 in 2002. 55 Annual Report 2002 Absenteeism and overtime Labor performance standards were maintained during the year. The absenteeism rate went from 5.8 in 2001 to 5.9 in 2002; while overtime was 4.5, slightly less than in 2001.

Training Given the need to develop the potential of the persons, according to the challenges of competitiveness and employability, the investment in training during 2002 was of US$7.6 million, invested in 6,019 courses for 77,796 participants, with a total of 1,160,294 teaching person hours.

Within this context, it is worth mentioning the development programs, one for executives, two in business administration and three of labour development for workers. Risk factors Copper price The financial results of the Corporation are significatively affected by the copper prices. To deal with these changes, Codelco makes all possible efforts to remain as one of the copper producer with the lowest costs in the industry.

The actions carried out do not include speculative operations.

Currency exchange parity and interest rates The Corporation has defined protection policies of currency exchange parity and interest rates. The exchange parity protections include exchange insurance, aimed at covering future variations in the Unidad de Fomento/dollar ratio, and Codelco 56 the interest rates protections include contracts to set fixed interest rates of future obligations.

As in the case of copper prices, these actions do not include speculative operations. Insurance

Codelco has insurance for physical assets and damages for paralyzing. These insurances cover all the assets, together with losses for lower production due to damages to the physical goods.

Also, it has insurance policies covering the transportation of exports and imports. In the case of the export of copper and by-products, the policies cover all risks from the Codelco storage to that of the clients. In the case of imports, coverage is from the storage of the providers to that of Codelco. Finances

During 2002, Codelco registered in the Superintendence of Values and Securities in order to diversify its funds of financing. This gives the Corporation access to not only the bank and capital markets abroad, but also to the Chilean capital market.

The risk classification for Codelco in the Chilean market is AAA, according to Fitch-Rate and Feller-Rate, maximum classification that an issuer may obtain in Chile. 57 Annual Report 2002 Concerning the international risk classification of Codelco, this is A2 and A-, according to Moody´s and Standard & Poor´s, respectively. Codelco´s classification is two levels higher than the risk of the Republic, according to Moody´s, and the best in the Latin American region.

Concerning Standard & Poor´s, the risk classification is limited to the evaluation that the analysts make of the country risk for Chile. Both classification place Codelco among the best classified mining companies in the world.

Among the main reasons for the risk classification of Codelco, it is worth mentioning its sound business position in the world copper market and its good operational performance. Also, the Corporation has a high generation of fluxes, its is one of the most efficient copper producers in the world, and it has the largest level of known copper reserves.

During 2002, Codelco carried out is first issue in the local market for 7 million UF, equivalent to US$165 million, at ten years, with an interest rate of 4.65%, the lowest ever obtained by an issuer in Chile. Codelco´s premiere in the local market met the expectations of the company, since the price and interest shown confirm the excellent reputation of Codelco within the financial markets.

In the international market and during the period, an issue for US$435 million was carried out, with an interest rate of 6.375% per year, the lowest rate ever achieved by a Chilean issuer at 10 years.

• Sociedad Contractual Minera El Abra • Minera Yabricoya SCM • Agua de La Falda S.A. • Compañía Contractual Minera Los Andes, CCMLA • Electroandina S.A. • Elaboradora de Cobre Chilena Limitada • Minera Pecobre S.A. de C.V. • CMS Chile S.A. • Asociación Garantizadora de Pensiones • Complejo Portuario Mejillones S.A. • Geotérmica del Norte S.A. • Inversiones Mejillones S.A. • Inversiones Tocopilla Ltda. • Compañía Minera Picacho SCM • Isapre Chuquicamata Ltda. • Isapre Río Blanco Ltda. • Isapre San Lorenzo Ltda. • Codelco Group USA Inc. • Chile Copper Limited • Codelco Küpferhandel GmbH • Instituto de Innovación en Minería y Metalurgia S.A. • Biosigma S.A. • Santiago de Río Grande S.A.C. • Codelco International Limited • Ejecutora Proyecto Hospital del Cobre - Calama S.A.

Filiales y coligadas

Sociedad Contractual Minera Minera Yabricoya SCM El Abra December 31st 2002 December 31st 2002

Legal nature Legal nature The society was formed by public scripture of June 28th 1994, granted by the notary Legal name: Minera Yabricoya SCM of Santiago Mr. Víctor Manuel Correa Valenzuela. RUT.: 77.139.460-4 The legal name of the society is "Sociedad Contractual Minera El Abra". Formation of the Society: February 2nd 1998 Sociedad Contractual Minera El Abra is a contractual mining society formed according Repertory N° 2484 to the regulations of articles 201 and following of the Mining Code of the Republic of Notary: Eduardo Pinto Peralta Chile. Underwritten and paid capital Underwritten and paid capital Underwritten and paid capital by Codelco (32,400 shares) and The underwritten and paid capital amounts to US$647,059,000 divided in 100,000 Minera Teck Cominco Chile Ltda. (39,600 shares) amounts to shares. The shareholders are "Cyprus El Abra Corporation" with 51,000 shares and a total of $148,834,274. "Corporación Nacional del Cobre de Chile" with 49,000 shares. Social aim Social aim Society formed by Codelco and Minera Cominco Chile Ltda, The aim of the society will be the survey, exploration and exploitation of the mining to survey, explore, develop and exploit the mining concessions deposit known as El Abra, located in the Second Region of Antofagasta, including its that form its patrimony. At the moment of forming the society, areas of expansion, as well as the neighboring or nearby ones; the extraction, Codelco and Cominco contributed in property with the beneficiation, and processing of the ores to be obtained of the exploitation of the Yabricoya y Ticuma Mining Concessions, respectively. Minera properties comprising such deposit and areas; and the transport and commercialization Yabricoya is currently in process of dissolution. of the products and by-products from the processing of the ores and other activities of the exploitation of the deposit. To accomplish this aim, the society may build and Board of Directors operate production, processing and beneficiation plants and facilities, to form or to John Collins purchase mining property, as well as perform all classes of operations related to the Bryan Morris, President same. The society shall be able to execute all actions and to celebrate all the contracts Francisco Camus (*) and conventions directly or indirectly leading to the attainment of its goal. Jorge Skármeta (*) 61 Annual Report 2002 Board of Directors Legal representative Titular Directors: Timothy Snider Héctor De Las Peñas Gary Loving, Jorge Riquelme Juan Eduardo Herrera (*), Juan Enrique Morales (*) Participation of Codelco in the capital and Alternate Directors: Cristián Morán, John C. Galassini, William S. Brack, Mario Espinoza (*) variations occurred during the exercise Executive Staff: Miguel Munizaga Badilla, President and Senior Vicepresident; Participation of Codelco: 45% Michael Kendrick, Senior Vicepresident of Operations; Douglas Comer, Executive Participation of Cominco Chile Ltda: 55% Vicepresident of Operations Variations year 2001: The Board of Directors of Corporación Mariano Neira Sáenz, Comptroller Nacional del Cobre de Chile by Agreement N° 02/2002 of the 01/30/02, authorized modifying the share participation of Minera Yabricoya SCM in terms that Codelco will have 40% Participation of Codelco in the capital and variations occurred of the shares and Cominco the remaining 60%, by the during the excercise contribution that the latter should make. This modification has Codelco owns 49% of the capital and there are no variations in the exercise. not been perfected as of this date.

Commercial relationship with Codelco Commercial relationship with Codelco The main common business refers to the sale of copper cathodes from El Abra to As a consequence of the termination of the association contract Codelco, with the annual amount being established in the marketing agreement, which that originated the society, due to the negative results of the states the sale to Codelco of 49% of the production that has not been committed to operations in the mining property, the partners have agreed third parties under contract, with a minimum of 30,000 metric tons. in a General Meeting of Shareholders of November 29th 2002, Also, Codelco sells to El Abra Sulfuric Acid, the amount and price being negotiated the dissolution of Minera Yabricoya SCM. each year. The agreement on copper sales is subject to a “Marketing Agreement” signed on June Contracts celebrated with Codelco 15th, 1995, between Sociedad Contractual Minera El Abra and Codelco Services Ltd. There were none. This agreement establishes as end date January 1st 2012 and it includes automatic renovations under annual terms. For the sales of Sulfuric Acid there is contract CL.8K.301 (Codelco number system) Proportion of the investment in total of the mother since 1998 and up to 2006. company Finally, the minor contracts must be included, C02394 for the mechanical preparation 2002 Investment in associated company US$45 thousand and analysis of samples, by Codelco, from 05/15/01 to 05/31/04); and contract 2001 Investment in associated company US$44 thousand C02482 for the purchase, sale and removal of scrap, from 09/24/02 to 12/31/03. Proportion of the investment in total of assets of the mother Also, during 2002 Codelco sold to El Abra 97,550 tons of copper cathodes. company 0.001%, 2002

Proportion of the investment in total of the mother company 2002 Investment in associated company US$52,431 thousands 2001 Investment in associated company US$84,488 thousands Proportion of investment in total assets of the mother company 0.78%, 2002

* Director or Executive of Codelco Agua de La Falda S.A. Compañía Contractual Minera December 31st 2002 Los Andes, CCMLA December 31st 2002

Legal nature Legal nature Closed Society formed by public scripture of July 25th Legal name: Compañía Contractual Minera Los Andes (CCMLA) 1996, which shareholders are Codelco with 49% and Minera RUT: 78.860.780-6 Homestake Chile S.A. with 51%. Constitution of the Society 16th May1996 RUT: 96.801.450-1 Repertory N° 273 Address: Barrio Industrial, Sitio 58, Alto Peñuelas, Coquimbo Notary M. Gloria Acharán Toledo

Underwritten and paid capital Underwritten and paid capital Underwritten and paid capital by Codelco: US$17,052,000 Underwritten and paid capital by Codelco (15,215,354 shares) and Minera Picacho (5,100 shares) amounts to M$8,002,984. Social aim The aim of the society is the survey, exploration and Social aim exploitation of mining properties containing gold, other Originally formed by Codelco and AMP to carry out geological explorations aimed at precious metals and other metals and their commercialization discovering and surveying mining deposits in Chile and abroad, in own or third party in any form. concessions. The administration decided to temporarily stop the exploration operations, By mid 2002, due to the exhaustion of the Agua de la Falda its operational continuation being subject to the financial support of its shareholders deposit the extraction operations were stopped, and the that is necessary for the development of its normal operations, and on their willingness operation went into closure including the washing of the to reinitiate activities. leaching dumps until June 2003. The operational future of the society depends on the viability Board of Directors of the Jerónimo project. Waldo Fortin Cabezas, Chairman (*) Mario Espinoza Durán (*) Board of Directors Alex Acosta Maluenda (*) Sergio Chávez Jofré, Chairman of the Board Nicolás Saric Rendic Raymond Threlkeld, Director Francisco Camus Infanta (*) Codelco David Deisley, Director 62 Edmundo Tulcanaza, Director (*) General Manager Nicolás Saric, Director Nicolás Saric Rendic Francisco Camus, Alternate Director (*) Kevin Atkinson, Alternate Director Participation of Codelco in the capital and variations occurred during Alejandro Labbé, Alternate Director Brett Shelock, Alternate Director the exercise René Muga, Alternate Director (*) Participation of Codelco: 99.95% and Compañía Minera Picacho 0.03%. Variations in 2001: In contract of November 17th 2001, AMP Chile Holdings Ltda. transferred 5,100 shares of CCMLA to Compañía Minera Picacho. As stated in public General Manager scripture of December 12th 2001 Inversiones Mineras Los Andes transferred 15,143,635 Felipe Núñez Cordero shares of CCMLA to Codelco.

Participation of Codelco in the capital and Commercial relationship with Codelco variations occurred during the exercise Codelco purchased the total fixed assets that CCMLA kept for $1,936,739. Participation of Codelco 49% Contracts celebrated with Codelco Commercial relationship with Codelco There are no contracts substantially affecting the operations and results of Codelco. There were no sales or purchases of goods and services outside contracts between the Society and Codelco. Proportion of the investment in total of the mother company 2002 Investment in subsidiary company US$0 Contracts celebrated with Codelco 2001 Investment in subsidiary company US$300 thousand There are no contracts substantially affecting the operations Proportion of the investment in total of assets of the mother company 0,01%, 2002 and results of Codelco.

Proportion of the investment in total of the mother company 2002 Investment in associated company US$5,087 thousand 2001 Investment in associated company US$6,729 thousand Proportion of the investment in total of assets of the mother company 0.01%, 2002

* Director or Executive of Codelco Electroandina S.A. Elaboradora de Cobre December 31st 2002 Chilena Limitada December 31st 2002

Legal nature Legal nature Electroandina S.A. Legal name: Elaboradora de Cobre Chilena Limitada RUT: 96.731.500-1 RUT: 79.681.920-0 Open society Formation of the Society: December 18th, 1995 Notary María Gloria Acharán Toledo Underwritten and paid capital Registered fs. 20,932 N° 10,784 in Registro de Comercio of Underwritten and paid capital by Codelco $69,595,218,353 Santiago year 1995

Social aim Underwritten and paid capital Generation and transmission of electrical energy as well as seaport services of industrial Underwritten and paid capital as of December 31st 2002 maintenance of transmission systems, of industrial training and capacitation. The amounts to $687,711,520. company is the main electrical power supplier of the SING, representing close to 40% of its supply. Its activities started in 1915 together with the Chuquicamata Mine. In Social aim 1995 Codelco created it from its Tocopilla Division and in 1996 sold, through and Originally formed in 1995 between Codelco and "Madeco international bidding, a controlling participation to Tractebel, Belgian company of the S.A." as a society of limited responsibility, aimed at studying electrical sector. and developing projects and investment of production and commercialization of manufactures and semi-manufactures Board of Directors of non-ferrous metals either directly or in association with third Eric De Muynck, Chairman parties. Manlio Alessi Remedi By public scripture of April 17th 1998, the society changed its Henk Bataille share structure; by this change Madeco S.A. left the society Yves Jourdain and Codelco became owner of 99% and Minera Picacho of Jan Flachet a 1%. Manuel Colcombet Jacqueline Saintard Vera Board of Directors 63 Jorge Navarrete Martínez (*) Mario Espinoza Durán, Director (*) Annual Report 2002 Marcelo Mobarec Asfura (*) Carlos Urzúa Ramírez, Director (*) Reinaldo Sapag Chain Luis Blanco Beckett, Director (*) Ricardo Campano Gándara (*) General Manager General Manager José Antonio Alvarez López Willem Van Twembeke Participation of Codelco in the capital and Participation of Codelco in the capital and variations occurred variations occurred during the exercise during the exercise The participation of Codelco is of 99% 34,8%. No variations. The participation of Compañía Minera Picacho SCM is of 1% Variations year 2002: No variations during the year. Commercial relationship with Codelco Between Electroandina S.A. and Codelco there are the following commercial Commercial relationship with Codelco relationships: None. 1. Electrical supply contract, Chuquicamata Division 2. Electrical supply contract, Radomiro Tomic Division Contracts celebrated with Codelco 3. Electrical supply contract, Sociedad Contractual Minera El Abra No contracts substantially affecting Codelco´s operations. 4. Electrical supply contract, Alliance Copper Limited (ACL) 5. Contract of supply of natural gas between DISTRINOR S.A. (subsidiary society of Proportion of the investment in total of the mother Electroandina S.A.) and Codelco Norte Division. 6. Contract of "Contract of Reception, Storage and Shipping of Sulfuric Acid" between company Electroandina and Codelco Chile. 2002 Investment in subsidiary company US$0 thousand 2001 Investment in subsidiary company US$567 thousand Proportion of the investment in total of assets of the mother Contracts celebrated with Codelco company 0.0%, 2002 The electrical supply contracts of the Chuquicamata and R. Tomic divisions and of the associated Sociedad Contratual Minera El Abra and ACL represent an important part of the operational costs of each entity. The two first ones were subscribed in 1995 under market conditions and they expire in 2009 and 2017 respectively. The two latter ones were awarded by bidding in which other parties participated. The other contracts do not substantially affect the operations or results of Codelco.

Proportion of the investment in total of the mother company 2002 Investment in associated company US$41,133 thousand 2001 Investment in associated company US$29,620 thousand Proportion of the investment in total of assets of the mother company 1.46497%, 2002

(*) Director o Ejecutivo de Codelco Minera Pecobre, S.A. de C.V. CMS Chile S.A. December 31st 2002 December 31st 2002

Legal nature Legal nature Formed on June 21st 1999, in Ciudad de México D.F., with CMS Chile Sistemas y Equipos Mineros S.A. is a closed society formed by public the name of Minera Peñodelco S.A. de C.V., according to scripture on July 29th 1992. act 275,615 volume 10,293 before Notary No. 10 of the D.F., Lic. Tomás Lozano Molina. Reformed on October 7th Underwritten and paid capital 1999, Corporación Nacional del Cobre de Chile is The capital of CMS Chile is of MUS$6,038 and is composed of 69,000 shares, which incorporated. On January 25th 2000, in Extraordinary were entirely underwritten and paid by Codelco (68,931 shares) and by Bernardo Infante Meeting of Shareholders the denomination is changed to Philippi (69 shares). These shares have no nominal value. Minera Pecobre, S.A. de C.V. Social aim Underwritten and paid capital (in Mexican pesos) The aim of the society is to fabricate, commercialize and to distribute, in Chile and Fixed capital 100,000 abroad, machinery, equipment and spare parts; also, through its subsidiary CMS Variable capital 140,595,300 Tecnología S.A. provides maintenance and repair services. Shown social capital 140,695,300 Board of Directors Social aim Alex Acosta Maluenda, Chairman (*) To explore, develop and exploit copper deposits in the Luis Blanco Beckett, Director (*) State of Sonora, Mexico. Waldo Fortin Cabezas, Director (*) Mario Espinoza Durán, Director (*) Board of Directors Hernán Sepulveda Astorga, Secretary (*) Jaime Lomelín Guillén, Chairman Octavio Alvídrez Cano General Manager Mario Arreguín Frade Víctor Olate Martínez Juan Enrique Morales Jiménez (*) Alex Acosta Maluenda (*) Participation of Codelco in the capital and variations occurred during Codelco 64 Participation of Codelco in the capital and the exercise The participation of Codelco is of 100% in CMS Chile S.A. and there have been no variations occurred during the exercise changes in such participation. The participation of Codelco is of 49% Codelco contributed during 2002 with US$2,205,000 equivalent to $20,761,300 Mexican pesos and a further Commercial relationship with Codelco US$375,000 as premium in share underwriting, equivalent The company has not performed any commercial activity during 2002 and no future to $3,430,885 Mexican pesos. commercial activity is considered.

Commercial relationship with Codelco Contracts celebrated with Codelco Codelco lends Pecobre various services in the field of The company has not performed any commercial activity during 2002 explorations, mainly through professionals with great expertise in the exploration of porphyric copper, who carry Proportion of the investment in total of the mother company out, in the projects that Pecobre performs in the State of 2002 Investment in subsidiary company US$0 Sonora, the necessary activities for the geological, 2001 Investment in subsidiary company US$0 geochemical and geophysical surveying, as well as the Proportion of the investment in total of assets of the mother company 0.00%, 2002 application of other techniques required to define the potential interest of porphyric copper deposits in those regions. During 2002 Codelco assigned exploration professionals to the Cobre Sonora, Los Humos and Tecolote projects.

Contracts celebrated with Codelco Codelco has a contract with Pecobre by which it invoiced in 2002 the amount of US$977,281 for exploration services corresponding to the Cobre de Sonora and Los Humos projects for the January-November 2002 period.

Proportion of the investment in total of the mother company 2002 Investment in associated company US$559 thousand 2001 Investment in associated company US$720 thousand Proportion of the investment in total of assets of the mother company 0.01%, 2002

* Director or Executive of Codelco Asociación Garantizadora de Complejo Portuario Mejillones Pensiones S.A. December 31st 2002 December 31st 2002

Legal nature Legal nature The Asociación Garantizadora de Pensiones is a corporation of private right with Complejo Portuario Mejillones S.A. mutual-previsional non-profit character, formed by Decree N° 1,625 of June 18th 1927, Closed Society formed to guarantee, as a substitute of the associated companies, the payment of retirement funds of the Law of Labor Accidents N° 4,055. The society has no profit Underwritten and paid capital aims, and therefore it is not subject to Income Law. Underwritten capital: US$35,992,385 Paid capital: US$27,217,883 Social aim The payment of retirement funds according to Law N° 4,055 and only for that purpose. Note: To calculate the underwritten and paid capital the exchange rate of the effective payment date was used. Board of Directors It is formed by the following persons named by the majority associate, Codelco. Social aim Titular directors: The aim of the Society is to project, build and exploit a seaport Carlos Urzúa R. (*) in the Mejillones Bay, II Region of Antofagasta. María Elena Brahms Z. (*) José Antonio Alvarez L. (*) Board Patricio Mac Niven S. (*) Roberto Souper Rodríguez, Chairman of the Board (*) Oscar Salgado W. (*) Jaime Gibson Aldunate, Vicepresident Board Luis Blanco B. (*) Mario Espinoza Durán, Director (*) Alternate directors: Eugenio Lahera Parada, Director Gustavo Sippa C. (*) Iván Simunovic Petricio, Director Gloria Parada Z. (*) Manager: General Manager Celso Núñez Salgado (*) Jorge Taboada Rodríguez 65 Participation of Codelco in the capital and variations occurred Participation of Codelco in the capital and Annual Report 2002 during the exercise variations occurred during the exercise The participation of Codelco is of 96.688338%, and there have been no changes in As of December 31st 2002: 100% such participation. Commercial relationship with Codelco Commercial relationship with Codelco Codelco provides CPM with several types of services, with The society has no commercial links with Codelco are charged to the cost center of CPM. Among them: - Accounting Contracts celebrated with Codelco - Transportation (airline tickets, ground transportation, etc.) The society has no commercial links with Codelco - Computer equipment, software, Internet and e-mail - Rental of offices Proportion of the investment in total of the mother company In the future it is considered the rental of CPM offices to 2002 Investment in subsidiary company US$625 thousand Codelco in the facilities of Terminal 1. 2001 Investment in subsidiary company US$726 thousand Proportion of the investment in total of assets of the mother company 0.01%, 2002 Contracts celebrated with Codelco Chile Contract of Seaport services for Copper Shipments, dated November 15th 1999 (CTA Contract): this is the contract regulating the lending of seaport services (shipment of copper and others) of Compañía Portuaria Mejillones S.A. to Codelco. CPM is a signer of this contract, with the function of fiscalization.

Proportion of the investment in total of the mother company 2002 Investment in subsidiary company US$19,485 thousand 2001 Investment in subsidiary company US$5,570 thousand Proportion of the investment in total of assets of the mother company 0.29%, 2002

* Director or Executive of Codelco Geotérmica del Norte S.A. Inversiones Mejillones S.A. December 31st 2002 December 31st 2002

Legal nature Legal nature Legal name: Geotérmica del Norte S.A. Inversiones Mejillones S.A. RUT. : 96.971.330-6 Closed Society Formation of the society repertory number 13.010/2000 Notary José Musalem Saffie Underwritten and paid capital Start of activities: December 5th 2001 $16,255,753,759 equivalent to 22,648 shares

Underwritten and paid capital Social aim Underwritten capital: $439,878,000 Purchasing and selling, under any title, of shares, bonds and other issues by Empresa Paid capital as of 12/31/02 $439,878,000 (contribution of Eléctrica del Norte Grande S.A. "EDELNOR", to exercise all rights and to comply with Codelco) all obligations derived from its quality of shareholder and holder of such values, in accordance with the law and the social regulations and, in general, to purchase, to sell, Social aim to invest in all types of immaterial goods such as shares, bonds in society, deposits, According to article four of the formation the social aim will mutual funds, participation certificates, credit titles, real estate, etc.; to manage such be: investment and to perceive the earnings they produce; and to participate in any other “1) The research, exploration and exploitation of the business or activity directly or indirectly related, connected and/or complementary to geothermal deposits located in the First, Second and Third the aim of the society. Regions of the country, 2) The commercialization, in any of its forms, of all the products, by-products, raw materials, Board manufactured, semi-manufactured or not, directly or Eric de Muynck indirectly deriving from the activities indicated, and 3) The Manlio Alessi Remedi society may also carry out any other activity that is directly Henk Bataille or indirectly related to the previous ones and allowing a Ricardo Campano Gándara (*) better performance of the social organization.” Jorge Navarrete Martínez (*)

Codelco Board of Directors General Manager 66 Daniel Fernández Koprick, Chairman Henk Bataille Ricardo Campano Gándara (*) Carlos Rubilar Ottone (*) Participation of Codelco in the capital and variations occurred during Salvador Harambour Gines José Luis Ramaciotti Frachia the exercise The participation of Codelco is of 34.80%. General Manager Patricio Lee Recabarren Commercial relationship with Codelco N/A Participation of Codelco in the capital and Contracts celebrated with Codelco variations occurred during the exercise N/A It corresponds to a 50.1% of the Social Capital. No variations in participation occurred during the last period. Proportion of the investment in total of the mother company 2002 Investment in associated company US$22,180 thousand Commercial relationship with Codelco Proportion of the investment in total of assets of the mother company 0.33%, 2002 At the closing of the 2002 period there are no commercial relationships between both companies.

Contracts celebrated with Codelco At the closing of 2002 there is a contract between both companies, which establishes the possibility of developing certain tasks by Codelco, previous request from the subsidiary through working orders, which may be accepted or not.

Proportion of the investment in total of the mother company 2002 Investment in subsidiary company US$0 2001 Investment in subsidiary company US$0 Proportion of the investment in total of assets of the mother company 0.00%, 2002

* Director or Executive of Codelco Inversiones Tocopilla Ltda. Compañía Minera Picacho December 31st 2002 SCM December 31st 2002

Legal nature Legal nature Inversiones Tocopilla Ltda. Legal name: Compañía Minera Picacho SCM Society of limited responsibility RUT: 78.712.170-5 Formation of the Society: September 26th 1994 Underwritten and paid capital Repertory N° 6552/94 Underwritten and paid capital by Codelco is of $90,379,782,292, corresponding to Notary Andrés Rubio Flores 49% of the capital. Underwritten and paid capital Social aim Underwritten and paid capital by Codelco (9,999 shares) Purchasing and selling, under any title, of shares, bonds and other issues by Empresa and Bernardo Infante Philipi (1 share) amounts to a total of Electroandina S.A., to exercise all rights and to comply with all obligations derived $771,746,878. from its quality of shareholder and holder of such values, in accordance with the law and the social regulations and, in general, to purchase, to sell, to invest in all types Social aim of immaterial goods such as shares, bonds in society, deposits, mutual funds, Originally formed in 1994 by Codelco and Sociedad Minera participation certificates, credit titles, real estate, etc.; to manage such investment Mount ISA Chile S.A., to carry out geological explorations and to perceive the earnings they produce; and to participate in any other business in lands of Codelco and Mount ISA. or activity directly or indirectly related, connected and/or complementary to the aim In 1997, Codelco purchases the shares of Mount ISA and of the society. broadens the scope of the company with the aim of requesting permits to survey for waters and to obtain water Board use rights, activity to which it is devoted lately. Eric de Muynck Manlio Alessi Remedi Board Henk Bataille Mario Espinoza Durán, Chairman (*) Jorge Navarrete Martínez (*) Nicolás Saric Rendic (*) Ricardo Campano Gándara (*) Francisco Camus Infanta (*) 67 Annual Report 2002 General Manager General Manager Manlio Alessi Remedi Nicolás Saric Rendic

Participation of Codelco in the capital and variations occurred Participation of Codelco in the capital and during the exercise variations occurred during the exercise The participation of Codelco is of 49%. The participation of Codelco is of 100%. Variations in 2001: There have been no share transfers in Commercial relationship with Codelco the year. N/A Commercial relationship with Codelco Contracts celebrated with Codelco None N/A Contracts celebrated with Codelco Proportion of the investment in total of the mother company None that may substantially affect the operations of Codelco. 2002 Investment in associated company US$105,786 thousand 2001 Investment in associated company US$91,172 thousand Proportion of the investment in total of the Proportion of the investment in total of assets of the mother company 1.58%, 2002 mother company 2002 Investment in subsidiary company US$88 thousand 2001 Investment in subsidiary company US$962 thousand Proportion of the investment in total of assets of the mother company 0.00132%, 2002

* Director or Executive of Codelco Isapre Chuquicamata Ltda. Isapre Río Blanco Ltda. December 31st 2002 December 31st 2002

Legal nature Legal nature Legal name: Isapre Chuquicamata Ltda. Legal Name: Isapre Río Blanco Limitada RUT: 79.566.720-2, RUT: 89.441.300-K Society of Limited Responsibility. Closed Society

Underwritten and paid capital Underwritten and paid capital Underwritten capital by Codelco $ 754,951,809 Underwritten and paid capital by Codelco: $536,721,219 Paid capital by Codelco $ 754,951,809 Underwritten capital by Fusat $ 9,943,641 Social aim Paid capital by Fusat $ 9,943,641 Institution of Previsional Health (Isapre)

Social aim Board The provision of health services and benefits, either directly Germán Morales Gaam, Chairman (*) or indirectly or through their financing, all according to the Leonardo Whittle Ferrer, Adjunct Chairman (*) regulations of D.F.L. Nº 3 of the Ministry of Health. To Gonzalo Bravo Fuchslocher, General Manager achieve this aim the society may perform and celebrate all Vilma Olave Garrido, Medical Director Isapre kinds of acts and contracts and even form other societies Maria Eugenia Villarroel V., Vicepresident Administration & Finances Isapre Río Blanco or become a part of other societies. Miguel Inzulza González, Director Río Blanco Health Center Juan Carlos Cabezas Beroiza, Vicepresident Administration & Finances Río Blanco Board Health Center Carlos Rubilar Ottone, Chairman (*) Directors Participation of Codelco in the capital and variations occurred during Héctor Espinoza Villarroel (*) the exercise Juan Scroggie Smitmans (*) The participation of Codelco is of 99.90% through Andina Division and of the part Raúl Meléndez Quiroga (*) corresponding to its percent in the San Lorenzo Isapre, with the remaining 0.10%. Codelco Francisco Peragallo Carrasco (*) 68 Walton Cherres (*) Roberto Guerra U. Commercial relationship with Codelco Hernán Polanco Andina Division entrusted the Isapre with delivering to the former workers subject to Francisco Castillo C. exit plans with the health benefits of Andina Division and their recognized families, the Juan Blanco Mella medical, pharmaceutical and dental services included in the health plans agreed in the Guillermo Cárceles Ch. collective labor contracts, that are not financed with the contributions of the workers Gualner Avalos I. that are established by law. Andina Division, as delegate administrator of the Obligatory Insurance for Labor General Manager Accidents and Professional Diseases established by Law N° 16,744 and its modifications, Mercedes Marotta Martinelli entrusted Isapre Río Blanco the care of the professional diseases, labor accidents of its workers, special examinations and pre-occupational examinations. Participation of Codelco in the capital and variations occurred during the exercise Contracts celebrated with Codelco The participation of Codelco is of 98.30%. Contract N° 4500137673, for health services to workers, former workers and their The participation of Fusat is 1.7% families. Agreement of health services of Law N° 16,744 Commercial relationship with Codelco Provision of health services through the medical service to Proportion of the investment in total of the mother company all Codelco workers affiliated to the Isapre, their families 2002 Investment in subsidiary company US$471 thousand and all affiliates that are not Codelco workers. The amount 2001 Investment in subsidiary company US$424 thousand of these services are paid monthly by the Isapre to Codelco. Proportion of the investment in total of assets of the mother company 0.00705%, 2002

Contracts celebrated with Codelco Contract of Provision of Health Services (06/01/82) Contract of Rent of Medical Instruments and Equipment (06/01/98) Contract of Provision of Services (06/01/98)

Proportion of the investment in total of the mother company 2002 Investment in subsidiary company US$1,619 thousand 2001 Investment in subsidiary company US$1,668 thousand Proportion of the investment in total of assets of the mother company 0.02423%, 2002

* Director or Executive of Codelco Isapre San Lorenzo Ltda. Codelco Group USA Inc. December 31st 2002 December 31st 2002

Legal nature Legal nature Legal name: Isapre San Lorenzo Ltda. Formed on December 21st 1992 as corporation in the State Society of Limited Responsibility. of Delaware according to section 108 (c) of the General Law on Corporations. Underwritten and paid capital Underwritten and paid capital by Codelco: $9,995,000 for 99.95% Underwritten and paid capital Underwritten and paid capital by Codelco: 1,000 shares, by Social aim a total of US$1,000. Provision and/or financing, by itself or through third parties, of health services and benefits, in the terms established by DFL N ° 3,981 of the Ministry of Health. To Social aim achieve this goal, the society may celebrate and carry out all types of contracts and Any act or activity that the law on societies of the State of acts, or even form or dissolve societies or associations, that may lead it to achieving Delaware allows. it. Board Board Roberto Souper (*) Hernán Sandoval Orellana, Chairman Juan Pablo Cortínez (*) Marcos Vergara Iturriaga, Director Waldo Fortin (*) Alvaro Cobarrubias Risopatrón, Director Carlos López Riquelme, Director (*) General Manager Sergio Barraza Castillo, Director Hugo Jordán Pablo Arteaga Rodríguez, Alternate Director (*) Enrique Solar Peralta, Alternate Director (*) Proportion of the investment in total of the mother Guillermo Donoso Cepeda, Alternate Director company General Manager 2002 Investment in subsidiary company US$779 thousand

2001 Investment in subsidiary company US$627 thousand 69 Luis Gustavo Cartes Acuña Proportion of the investment in total of assets of the mother Annual Report 2002 company 0.01166%, 2002 Participation of Codelco in the capital and variations occurred during the exercise 99.95% There is no variation of the participation of Codelco in the Isapre during the last exercise.

Commercial relationship with Codelco To deliver health services and to collaborate in the financing of health services as established in the collective contracts and agreements that the Salvador Division keeps and will keep with its workers.

Contracts celebrated with Codelco Contract 2054 Health Services Agreement. Contract 2055 Agreement to cover differences not included in health plan with employer. Contract 2056 Health Services Agreement (consultation).

Proportion of the investment in total of the mother company 2002 Investment in subsidiary company US$303 thousand 2001 Investment in subsidiary company US$133 thousand Proportion of the investment in total of assets of the mother company 0.00453%, 2002

* Director or Executive of Codelco Chile Copper Ltda. Codelco Küpferhandel GmbH December 31st 2002 December 31st 2002

Legal nature Legal nature Society of Limited Responsibility created in England on Commercial Society of limited responsibility formed in March 29th 1971. Hamburg on August 21st 1981.

Underwritten and paid capital Underwritten and paid capital Paid capital of £ 1,000, in 1,000 shares. Underwritten and paid capital by Codelco Chile, EURO 3,000,000, as only shareholder. Social aim Sales agent and representative of Codelco in Great Britain Social aim and other parts of Europe for copper and molybdenum Import and export, commercialization and transformation products in the markets of the United Kingdom, Spain, of metal in all its forms, particularly copper, and Norway, Sweden and Turkey. commercialization with equipment for the copper producing industry. Board Roberto Souper R. (*) Board Juan Eduardo Herrera (*) Juan Villarzú R. (*) Juan Pablo Cortínez (*) Roberto Souper R. (*) Juan Eduardo Herrera (*) General Manager Gonzalo Cuadra General Manager Heribert Heitling Proportion of the investment in total of the mother company Proportion of the investment in total of the 2002 Investment in subsidiary company US$1,718 thousand mother company 2001 Investment in subsidiary company US$1,431 thousand 2002 Investment in subsidiary company US$20,189 Codelco 70 Proportion of the investment in total of assets of the mother thousand company 0.02571%, 2002 2001 Investment in subsidiary company US$16,375 thousand Proportion of the investment in total of assets of the mother company 0.20216%, 2002

* Director or Executive of Codelco Instituto de Innovación en Biosigma S.A. Minería y Metalurgia S.A. December 31st 2002 December 31st 2002

Legal nature Legal nature Instituto de Innovación en Minería y Metalurgia S.A. Legal name: Biosigma S.A. Closed Society RUT: 96.991.180-9 Legal nature: Closed Society Underwritten and paid capital Underwritten and paid capital by Codelco Chile: as of December 31st 2002 is Underwritten and paid capital $1,720,406,933 Underwritten Capital by Codelco: US$2,000,000 equivalent in Chilean currency Social aim Paid Capital by Codelco: $693,900,000 The aim of the Society is the development of technological research and of mining processes. Social aim Biosigma S.A. was formed by Codelco in association with Board Nippon Mining and Metals Co., Ltd., of Japan on May 31st Juan Enrique Morales Jaramillo (*) 2002. The aim of the society is the development of processes Eugenio Thiers Lillo and technology in the fields of genomics, proteomics and Pedro Morales Cerda (*) bioinformatics for mining and, in general, the application of Germán Morales G. (*) systems based on microorganisms, and other activities and Mario Espinoza Durán (*) businesses related to the already mentioned. The activities that carries out at present are activities of research and Main Executives: development in the fields of genomics, proteomics and Juan Carlos Salas Morales, General Manager bioinformatics for mining. Agustín Sepúlveda Osorio, Under Manager of Business and Finances Board Participation of Codelco in the capital and variations occurred Juan Enrique Morales Jaramillo, Director (*) during the exercise Pedro Antonio Morales Cerda, Director (*) 71 The participation of Codelco is of 99.93% Mauricio Urbina Muñoz, Director Annual Report 2002 Roberto Madrid Contreras, Director (*) Shigeru Oi, Director Commercial relationship with Codelco Satoshi Uno, Director The current main commercial relationship with Codelco is defined in the Agreement Mario Espinoza Durán, Alternate Director (*) on Technological Innovation and Research of September 28th 1998, through which Luis Castelli Sandoval, Alternate Director (*) the IM2 provides services of development, direction, administration and execution of René Muga Escobar, Alternate Director (*) programs and projects of technological research and innovation. Gloria Parada Zamorano, Alternate Director (*) The future link projected with Codelco will be defined by the development of the Tetsu Imai, Alternate Director portfolio of programs and projects of innovation in relationship with the strategic Masashi Kikuchi, Alternate Director guidelines defined by the Corporation. IM2 is in a process of redefinition of its strategy in order to adapt its structure of technological business to contribute to value adding for Codelco. General Manager Ricardo Badilla Ohlbaum Contracts celebrated with Codelco Contract Relationship with Subsidiary Participation of Codelco in the capital and Technological research and innovation. Client variations occurred during the excercise Technical documentation service. Provider Participation amounts to 66.67% of the shares. Computer rent service. Provider Contracts celebrated with Codelco Proportion of the investment in total of the mother company During the 2002 exercise no acts or contracts were celebrated 2002 Investment in subsidiary company US$2,391 thousand between Codelco and Biosigma S.A. other than the Agreement 2001 Investment in subsidiary company US$2,802 thousand of January and the payment of part of the shares underwritten Proportion of the investment in total of assets of the mother company 0.04%, 2002 by Codelco, of July 18th 2002, amounting to$693,900,000. Proportion of the investment in total of the mother company 2002 Investment in subsidiary company US$907 thousand 2001 Investment in subsidiary company US$0 Proportion of the investment in total of assets of the mother company 0.02%, 2002

* Director or Executive of Codelco Santiago de Río Grande S.A.C. Codelco International Limited December 31st 2002 December 31st 2002

Legal nature Legal nature Closed society, formed by public scripture of October 2nd Codelco International Limited is a company created in Bermuda, in 2000, according 1998, signed in notary of Gloria Cortez Escaida. to the laws of the State of Bermuda of The Companies Act 1981, section 62 (2), defining its main business in the category “Mining Company” according to its registration Underwritten and paid capital in the "Notice of Address of Register Office". The capital of the society amounts to M$5,457 and it is composed of 5,000 shares, which were underwritten and Underwritten and paid capital paid by Codelco (4,999 shares) and Minera Picacho Underwritten and paid capital: US$12,000. (1 share). Social aim Social aim The aim is to manage and control Codelco´s interest in various international projects. Obtaining water use rights and mining resource exploration. Through this company and its subsidiary Codelco Technologies Limited investments have been formalized in societies with Billiton in Alliance Copper Limited, aimed at Board the use of modern technology in the mining operation. Also, through Codelco Juan Enrique Morales Jaramillo (*) International Limited, investments have been carried out in Quadrem International Silvio Girardi Morales (*) Holdings Limited, global company formed by 18 of the most important mining Pedro Cortez Narin (*) companies of the world, to operate in the electronic market in which the companies may operate and buy goods and services. General Manager Codelco International Limited and Codelco Technologies Limited have formed the Mirta Solari Espinoza society Codelco Do Brasil Mineracao Limitada, with address in Brazil, aimed at developing exploration and exploitation projects, commercial and market development activities. Under this scheme the latter has associated with Minera Santa Elina of Participation of Codelco in the capital and Brazil to create the Tarauaca S.A. exploration society and also with Barrick of Brazil variations occurred during the exercise for another exploration joint venture Direct and indirect participation amounts to 100%

Codelco Board 72 Commercial relationship with Codelco Mario Espinoza Durán, Director & Chairman of the Board (*) Codelco lends services of various types to Santiago de Río Waldo Fortin Cabezas, Director & Vicechairman of the Board (*) Grande S.A., to perform the activities associated to its Christopher G. Garrod, Representative of the Company in Bermuda functions. Participation of Codelco in the capital and variations occurred during the exercise Contracts celebrated with Codelco Direct and indirect participation amounts to 100%. There is a contract between Santiago de Río Grande S.A. and Codelco to carry out works of exploration, surveying Commercial relationship with Codelco of underground waters and obtaining water rights. During the exercise, Codelco International Limited and its subsidiary Codelco Technologies Limited have contributed, through loans from Codelco to these, with Proportion of the investment in total of the capital to societies abroad such as Codelco Brasil Mineracao Limitada, Alliance mother company Copper Ltd. and others, as well as to the initiation of acts and contracts aimed at the 2002 Investment in subsidiary company US$7 thousand creation of new joint ventures abroad. This type of commercial relationship will continue 2001 Investment in subsidiary company US$8 thousand in the future, subject to agreements of the Board of Directors of Codelco. Proportion of the investment in total of assets of the mother company 0.0001%, 2002 Contracts celebrated with Codelco There are no acts or contracts between Codelco and Codelco International Limited substantially affecting the operations or results of Codelco.

Proportion of the investment in total of the mother company 2002 Investment in subsidiary company US$0 2001 Investment in subsidiary company US$0 Proportion of the investment in total of assets of the mother company 0%, 2002

* Director or Executive of Codelco Ejecutora Proyecto Hospital del Cobre-Calama S.A. December 31st 2002

Legal nature The framework agreement was celebrated through public Legal name: Ejecutora Proyecto Hospital del Cobre-Calama S.A. scripture dated March 3rd 2000, signed before the notary of Closed Society Santiago, Hugo Leonardo Pérez Pousa.

Underwritten and paid capital Contracts celebrated with Codelco Codelco-Chile $149,985,000 (99.9%) Contract 4500221291 signed between Isapre San Lorenzo $15,000 (0.01%) - Codelco-Chile, Chuquicamata Division and - Ejecutora Proyecto Hospital del Cobre-Calama S.A. Social aim It corresponds to the formalization of the payment of the a) To project and to construct, by itself and by third parties, a hospital building in the subletting of the Hospital del Cobre, Dr. Salvador Allende G., city of Calama. until March 2021, according to the Framework Agreement. b) To develop all the necessary activities to accomplish the social aim, for which it will perform all acts and celebrate all contracts that may be required. Contract 4500265853 signed between c) To let and sublet hospital buildings, to contract insurance and to carry out - Codelco-Chile, Chuquicamata Division and maintenance, repair and improvement of the hospital buildings that it lets and sublets. - Ejecutora Proyecto Hospital del Cobre-Calama S.A. It corresponds to the formalization of the operative maintenance Board service of the Hospital del Cobre, Dr. Salvador Allende G., carried out by the Sociedad Ejecutora until May 2002. Carlos Rubilar Ottone, Chairman (*) Raúl Meléndez Quiroga, Director (*) Contract 4500310050 signed between Francisco Coddou Pereda, Director (*) - Codelco-Chile, Codelco Norte Division and María Rosa Martínez Núñez, Director (*) - Ejecutora Proyecto Hospital del Cobre-Calama S.A. Héctor Cerda Ortiz, General Manager (*) It corresponds to the formalization of informatics support service to the Sociedad Ejecutora, by the Division (contract Participation of Codelco in the capital and variations occurred SEHC-98-002, with CHC Consultoría Gestión S.A.), until during the exercise December 31st 2003. 73 Codelco-Chile 99.99% $184,341,191.04 Annual Report 2002 Isapre San Lorenzo 0.01% $18,435.96 Contract 4500310051 signed between - Codelco-Chile, Codelco Norte Division and Commercial relationship with Codelco - Ejecutora Proyecto Hospital del Cobre-Calama S.A. Framework agreement between: It corresponds to the formalization of the invoicing and - Codelco-Chile accounting service of the Sociedad Ejecutora, by Codelco, - Ejecutora Proyecto Hospital del Cobre-Calama S.A. and until March 31st 2021. - Las Américas Administradora Fondos de Inversión S.A. It corresponds to the regulatory framework of the relationship between the parts, for Contract 4500349451 signed between a period of 20 years (until 03/31/2021), where the following legal outline is established: - Codelco-Chile, Codelco Norte Division and - Ejecutora Proyecto Hospital del Cobre-Calama S.A. 1) Codelco-Chile sold to Las Américas the land where the Hospital del Cobre Calama It corresponds to the formalization of the conceptual engineering was built, in the value of UF 33,201.25, equivalent to US$1,000,000. service of the Project Expansion Primary Care Center, carried 2) Las Américas could not sell the land without the authorization of Codelco. out by the Sociedad Ejecutora for the Division, until February 3) Las Américas delegated the building of the new hospital in the Sociedad Ejecutora. 2003. 4) Las Américas contributed to the Sociedad Ejecutora the funds required for the building of the hospital complex. Proportion of the investment in total of the mother 5) The Sociedad Ejecutora built the hospital through the building company TECSA company S.A. 2002 Investment in subsidiary company US$31 thousand 6) Las Américas rented the new hospital to the Sociedad Ejecutora, vouched for by 2001 Investment in subsidiary company US$266 thousand Codelco, for a period of 10 years, automatically renewable once for the same Proportion of the investment in total of assets of the mother period. company 0.00046%, 2002 7) The amount of monthly rent to be paid by the Sociedad Ejecutora to Las Américas, was established in the corresponding contracts. 8) At the end of the period, Las Américas will form a Closed Society, (Sociedad Inmobiliaria Hospital del Cobre-Calama S.A.) which capital will be the land and the hospital built on it. 9) Las Américas will sell, at the end of the period, the social rights of this Closed Society to Codelco, at the same value at which the land was purchased, that is US$1,000,000.

* Director or Executive of Codelco Network of Subsidiaries and Associated Companies of Codelco Chile

100% 100% 100% Compañia Minera Chile Copper Ltd. Codelco-Küpferhandel Picacho SCM (United Kingdom) (Germany)

80% 20% 100% 99% 1% 0.02% 99.98% Codelco C.M.S. Elaboradora de Cobre Santiago de Río Grande Services Chile S.A. Chilena Limitada S.A.C.

100% 40% Metall Agentur Deutsche Giessdraht Codelco Gmbh Gmbh (Germany) 74

60.77% 17.50% 21.73% 0.1% 99.9% 99.9% 0.01%

CMS Tecnología S.A Inversiones Complejo Portuario de Copperfiel Ltda. Mejillones S.A.

100% 0.03% 99.97% Ejecutora proyecto Compañia Contractual Hospital del Minera Los Andes S.A. Cobre-Calama S.A.

50% 49% 49% 65.2% 34.8% 99.93% Geotérmica del SCM Inversiones Inversiones Instituto de Innovación en Norte S.A. El Abra Tocopilla Ltda. Mejillones S.A. Minería y Metalurgia S.A. (IM2)

65.2% 34.8% 82.34% Electroandina S.A. (ex Central Edelnor S.A. Termoeléctrica Tocopilla)

Electroandina Distrinor S.A. International Inc. CODELCO

100% 49% 100% Codelco Asia Minera Pecobre S.A. Codelco International (Singapur) de C.V. (Mexico) Limited (Bermuda)

100% 10% 90% 6% Codelco Group Codelco Do Brasil Quadrem (USA) Mineracao Ltda. (Mining, Minerals and Metals Markeplace)

100% 2% 49% Codelco-USA Inc. Codelco Technologies Tarauaca S.A. 75 (USA) Limited (Bermuda) (Brazil) Annual Report 2002

50% Codelco Metals Inc. (USA) Alliance Copper Limited Joint Venture of Exploration in Brazil 96.7% Asociación Garantizadora de Pensiones

66.67% 45% 49% 98.30% 99.95% 99.90%

BioSigma S.A. Minera Yabricoya SCM Agua de La Falda S.A. Isapre Chuquicamata Isapre San Lorenzo Isapre Río Blanco Ltda. Ltda. Ltda.

Consolidated balance sheets Consolidated statements of income Consolidated statements of cash flows Reconciliation of net income to cash flows from operating activities Notes to the consolidated financial statements Balance sheets Statements of income Statements of cash flows Reconciliation of net income to cash flows from operating activities Notes to the consolidated financial statements Statements of income by division Allocation of income and expenses of the Head Office and subsidiaries Financial statements of associated companies Main accounting criteria applied

Financial statements

Chilean pesos Thousands of Chilean pesos United States dollars Thousands of United States dollars

Consolidates Simplified Statements Corporación Nacional del Cobre de Chile Report of independent accountants Santiago, Chile, December 31, 2002 and 2001

To the President and Directors of Corporación Nacional del Cobre de Chile

We have audited the consolidated balance sheets of Corporación Nacional del Cobre de Chile and subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of income and of cash flows for the years then ended. These financial statements (including the related notes) are the responsibility of the management of Corporación Nacional del Cobre de Chile. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards in Chile. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide reasonable basis for our opinion. 79 In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial Annual Report 2002 position Corporación Nacional del Cobre de Chile and subsidiaries as of December 31, 2002 and 2001, the results of their operations and their cash flows for the years then ended, in accordance with the regulations of the Chilean Superintendency of Securities and Insurance and generally accepted accounting principles in Chile.

The accompanying footnotes, which are attached to the financial statements in the present report, relate to a summarized version of those included in the full version of the Company’s consolidated financial statements on which we issued an opinion dated February 28, 2003, which include additional information required by a regulating body which is not indispensable for an adequate interpretation of these consolidated financial statements.

Héctor Delgado Ñ. Santiago, February 28, 2003 Consolidated balance sheets

The accompanying notes 1 to 29 form an As of December 31, 2002 and 2001 integral part of these financial statements. (Amounts in thousands of US$)

2002 2001

ASSETS

CURRENT ASSETS: Cash 12,019 9,620 Time deposits 141,214 25,468 Marketable securities, net 346 1,575 Trade receivables, net 225,221 204,968 Notes receivable, net 2,622 129 Other receivables, net 132,732 188,595 Amounts due from related companies 21,693 3,500 Inventories, net 494,579 509,272 Income taxes recoverable 182,834 94,693 Prepaid expenses 7,561 7,350 Deferred income taxes 0 28,659 Other current assets 768 3,038

Total current assets 1,221,589 1,076,867

PROPERTY, PLANT AND EQUIPMENT: Codelco Land 29,496 39,134 80 Buildings and infrastructure 5,787,725 5,161,848 Machinery and equipment 5,307,229 5,212,619 Other fixed assets 2,773 858 Revaluation from fixed asset technical appraisal 417,794 435,802 Less: Depreciation (6,640,467) (6,278,001)

Property, plant and equipment, net 4,904,550 4,572,260

OTHER ASSETS: Investments in related companies 228,121 213,130 Investments in other companies 13,233 3,050 Long-term receivables 63,635 52,360 Amounts due from related companies 80,887 79,754 Intangibles 3,497 3,889 Less: amortization (1,006) (830) Other assets 218,459 119,158

Total other assets 606,826 470,511

TOTAL ASSETS 6,732,965 6,119,638 Consolidated balance sheets

The accompanying notes 1 to 29 form an As of December 31, 2002 and 2001 integral part of these financial statements. (Amounts in thousands of US$)

2002 2001

LIABILITIES AND EQUITY

CURRENT LIABILITIES: Short-term debt due to banks and financial institutions 206,275 167,120 Current portion of long-term due to banks and financial institutions 276,806 152,243 Current portion of bonds payable 8,253 3,667 Dividends payable 0 36 Accounts payable 247,970 266,667 Notes payable 703 57 Other payables 20,800 15,844 Amounts due to related companies 20,846 11,067 Provisions 175,301 167,544 Withholdings 46,885 44,209 Income taxes payable 366 46 Deferred income 1,271 3,922 Deferred income taxes 19,196 0 Other current liabilities 3,005 2,269

Total current liabilities 1,027,677 834,691 81 Annual Report 2002 LONG-TERM LIABILITIES: Due to banks and financial institutions 600,000 875,000 Bonds payable 897,643 300,000 Long-term notes payable 46,787 0 Other payables 0 6,860 Provisions 535,162 533,774 Deferred income taxes 887,372 856,486 Other long-term liabilities 5,691 3,779

Total long-term liabilities 2,972,655 2,575,899 MINORITY INTEREST (432) 9,107

EQUITY: Paid-in capital, no par value 1,524,423 1,524,423 Other reserves 1,237,019 1,226,797 Net income for the year 48,476 25,574 Provisional dividends for fiscal benefit (76,853) (76,853)

Total equity 2,733,065 2,699,941

TOTAL LIABILITIES AND EQUITY 6,732,965 6,119,638 Consolidated statements of income

The accompanying notes 1 to 29 form an For the yeras ended December 31, 2002 and 2001 integral part of these financial statements. (Amounts in thousands of US$)

2002 2001

OPERATING INCOME

Sales 3,489,879 3,587,564

Cost of sales (2,786,942) (2,920,400)

Gross profit 702,937 667,164

Administrative and selling expenses (159,676) (138,131)

Operating income 543,261 529,033

NON-OPERATING INCOME AND EXPENSE:

Interest income 9,473 10,846 Equity participation in income of related companies 4 104 Other non-operating income 110,116 134,855 Equity participation in losses of related companies (48,006) (49,083) Interest expense (77,046) (99,570) Other non-operating expenses (442,271) (402,516) Codelco Price-level restatement 226 707 82 Foreign currency translation 32,906 27,953

Non-operating loss (414,598) (376,704)

INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 128,663 152,329

Income taxes (81,795) (126,757)

INCOME BEFORE MINORITY INTEREST 46,868 25,572

MINORITY INTEREST 1,608 2

NET INCOME FOR THE YEAR 48,476 25,574 Consolidated statements of cash flows The accompanying notes 1 to 29 form an For the yeras ended December 31, 2002 and 2001 integral part of these financial statements. (Amounts in thousands of US$)

2002 2001

CASH FLOWS FROM OPERATING ACTIVITIES: Collections from customers 3,507,351 3,243,478 Interest received 5,395 4,365 Dividends and other distributions 393 4,317 Other income received 377,925 359,333 Payments to suppliers and personnel (2,555,339) (2,236,937) Payment of interest (70,570) (98,705) Payment of income taxes (80,887) (2,565) Other expenses (273,383) (261,455) Payment of value added tax and other similar taxes (321,993) (306,674) Net cash provided by (used in) operating activities 588,892 705,157

CASH FLOWS FROM FINANCING ACTIVITIES: Financing obtained 550,258 1,290,416 Bonds payable 597,643 0 Dividends paid 0 (102,409) Payment of loans (660,000) (1,155,000) Other disbursements for financing 0 (24,197)

Net cash provided by (used in) financing activities 487,901 8,810 83 Annual Report 2002 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales of fixed assets 542 0 Proceeds from sales of permanent investments 2,552 0 Proceeds from sales of other investments 0 24,073 Other loans received from related companies 0 28,050 Other investing income 29,329 29,756 Additions to property, plant and equipment (843,981) (585,754) Long-term investments (62,579) (38,315) Loans granted to related companies 0 (39,503) Other investment disbursements (85,740) (147,235) Net cash provided by (used in) investing activities (959,877) (728,928)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 116,916 (14,961)

CASH AND CASH EQUIVALENTS BEGINNING OF YEAR 36,663 51,624

CASH AND CASH EQUIVALENTS END OF YEAR 153,579 36,663 Reconciliation of net cash flows from operating activities to net income

The accompanying notes 1 to 29 form an For the yeras ended December 31, 2002 and 2001 integral part of these financial statements. (Amounts in thousands of US$)

2002 2001

Net income for the year 48,476 25,574

Loss (gain) on sales of fixed assets 11,356 0

Charges (credits) to income which do not represent Cash flows: Depreciation 389,699 372,933 Amortization 106,051 84,697 Write-offs and provisions 51,972 278,151 Equity participation on income of related companies (4) (104) Equity participation in losses of related companies 48,006 49,083 Price-level restatement, net (226) (707) Foreign currency translation, net (32,906) (27,953) Other credits to income which do not represent cash flows (33,921) (52,816)

Changes in assets which affect cash flows: (Increase) decrease Trade receivables (20,253) (85,888) Inventory 14,693 90,436 Other assets (21,017) (113,961)

Codelco Changes in liabilities which affect cash flows: Increase (decrease) 84 Accounts payable associated with operating results (3,336) 101,371 Interest payable 3,892 (11,952) Income tax payable, net 320 (3,115) Value added tax and other similar taxes payable, net 27,698 (590)

Minority interest income (loss) (1,608) (2)

NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES 588,892 705,157 Simplified notes to the consolidated financial statements As of December 31, 2002 and 2001

In management’s opinion the accompanying footnotes provide sufficient information in a less detailed format compared to the information contained in the footnotes to the financial statements which were presented to the Chilean Superintendency of Securities and Insurance which are filed for public use, This information may also be consulted with at the Company’s Offices.

Note 01 Description of business

Corporación Nacional del Cobre de Chile (“Codelco”, or the “Company”) is registered with the Securities Registry No. 785 of the Superintendency of Securities and Insurance. The Company is subject to the review of the Chilean Superintendency of Securities and Insurance.

The Company was formed as stipulated by Law Decree (D.L.) N°_1350 dated 1976. Codelco is a government owned 85 mining, industrial and commercial company, which is a legal entity in itself and maintains its own equity. Codelco currently Annual Report 2002 carries out its productive activities through its Chuquicamata, Radomiro Tomic, El Salvador, Andina, El Teniente and Talleres divisions. The Company also carries out similar activities in other mining deposits, directly or in association with third parties.

Codelco’s financial activities operate according to a budget system that is formed by an Operations Budget, an Investment Budget and a Loan Amortization Budget.

The Company’s tax regime is determined by Decree Law N° 1.350 and 2.398.

The Company currently has no subsidiaries registered at the Securities Registry of the Superintendency of Securities and Insurance except for Electroandina S.A. and subsidiary, which, is not controlled by Codelco.

Note 02 Summary of Significant Accounting Policies

a) Accounting periods covered:

These consolidated financial statements cover the years ended December 31, 2002 and 2001.

b) Basis of preparation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted issued by the Chilean Association of Accountants, and regulations of the Chilean Superintendency of Securities and Insurance. Should any discrepancy exist between the previously mentioned principles and regulations, the regulations of the Chilean Superintendency of Securities and Insurance will supersede the accounting principles generally accepted in Chile. c) Account currency

In accordance with Article 26 of D.L. N° 1,350, the Company’s accounting is recorded in United States dollars.

d) Bases of consolidation

In accordance with the regulations of the Chilean Superintendency of Securities and Insurance and Technical Bulletins issued by the Chilean Association of Accountants, the consolidated financial statements of the Company and its subsidiaries include the assets, liabilities, results of operations, and cash flows of the Company and its subsidiaries indicated in the following chart:

Ow nership interest Name of the company 2002 2001

Directo Indirecto Total Total Chile Copper Limited - Inglaterra 99.99 0.01 100.00 100.00 Codelco Group USA Inc. - Estados Unidos 99.99 0.01 100.00 100.00

Codelco Codelco International Limited - Bermuda 99.99 0.01 100.00 100.00 86 Codelco Küpferhandel Gmhb - Alemania 99.99 0.01 100.00 100.00 Compañía Minera Picacho (SCM) 99.99 0.01 100.00 100.00 Compañía Contractual Minera Los Andes 99.97 0.03 100.00 100.00 Isapre Chuquicamata Limitada 98.30 0.00 98.30 98.30 Elaboradora de Cobre Chilena Limitada 99.00 1.00 100.00 100.00 Asociación Garantizadora de Pensiones 96.69 0.00 96.69 96.69 Isapre San Lorenzo Limitada 99.95 0.00 99.95 99.95 Isapre Río Blanco Limitada 99.99 0.01 100.00 100.00 CMS - Chile Sistema y Equipos Mineros S.A. 99.99 0.01 100.00 100.00 Ejecutora Proyecto Hospital del Cobre Calama S.A. 99.99 0.01 100.00 100.00 Complejo Portuario Mejillones S.A. 99.90 0.10 100.00 100.00 Instituto de Innovación en Minería y Metalurgia S.A. 99.93 0.00 99.93 99.93 Santiago de Río Grande S.A.C. 99.98 0.02 100.00 100.00 Sociedad Geotérmica del Norte S.A. 50.01 0.00 50.01 0.00 Biosigma S.A. 66.67 0.00 66.67 0.00

All significant intercompany transactions between the consolidated entities have been eliminated in consolidation, and the participation of minority investors have been recorded as minority interest in the Consolidated Financial Statements. The consolidated financial statements consider the elimination of balances, transactions and unrealized gains between the companies included in the consolidation, which include foreign and domestic subsidiaries.

Even though the subsidiaries Complejo Portuario Mejillones S.A. and Compañía Contractual Minera Los Andes S.A. are in their development stage, they have been included in consolidation. Simplified notes to the consolidated financial statements As of December 31, 2002 and 2001

Given that the Company does not have the control of the management of Electroandina S.A. and Inversiones Mejillones S.A., and that in accordance with generally accepted accounting principles in Chile the conditions required to include these subsidiaries are not met, the previously mentioned subsidiaries have not been included in consolidation.

Electroandina S.A. Codelco has direct ownership interest in Electroandina S.A. of 34.8% and indirect through Inversiones Tocopilla Ltda., where Codelco has ownership interest of 49% and its strategic partner Tractebel Andino S.A. has interest of 51%. Inversiones Tocopilla Ltda. owns 65.2% of the shares of Electroandina S.A.

Inversiones Mejillones S.A. Codelco has direct and indirect ownership interest in Inversiones Mejillones S.A. of 34.8% and indirect through Inversiones Tocopilla Ltda., where Codelco has 49% and its strategic partner Tractebel Andino S.A. has interest of 51%. Inversiones Tocopilla Ltda. owns 65.2% of the shares of Inversiones Mejillones S.A. e) Constant currency restatement

The financial statements of the Chilean subsidiaries, which maintain their accounting in Chilean pesos, have been price- 87 Annual Report 2002 level restated to recognize the effects of the variation in the currency’s purchasing power occurred during each year.

In line with this, restatements for inflation have been determined according to the values informed by the Chilean Institute of Statistics. The variations informed by the aforementioned Institute for the years ended December 31, 2002 and 2001 were 3.0% and 3.1%, respectively. f) Basis of conversion

The Company’s assets and liabilities in pesos, mainly composed of cash, accounts receivable, investments in companies in Chile, obligations and provisions, have been expressed in United States dollars at the observed exchange rate at each period closing date of Ch$ 718.61 per US dollar as of December 31, 2002 (2001: Ch$ 656.20 per US dollar).

The Company’s expenses and income in Chilean pesos have been expressed in US dollars at the observed exchange rate on the date that each transaction was recorded in the accounting records.

Exchange differences are charged or credited to income as applicable.

The average exchange rate for the period from January 1 to December 31, 2002 was Ch$689.24 per US dollar (2001: Ch$ 634.28 per US dollar).

Chilean subsidiaries Assets and liabilities and income statement accounts in pesos as of December 31, 2002 and 2001 have been converted to US dollars at the exchange rates on those dates (2002: Ch$ 718.61 per US dollar; 2001: Ch$ 656.20 per US dollar). Foreign subsidiaries As of December 31, 2002 and 2001, the conversion of financial statements of foreign subsidiaries from their respective foreign currencies, have been converted to US dollars as of the end of the respective period, as follows:

2002 2001 US$ US$

British Pound Sterling 1.60436 1.45370 Euro 1.04723 - German marc - 0.45163 Mexican peso 0.09626 0.10931

g) Time deposits

Time deposits are recorded at investment value plus corresponding interest accrued at each year closing date.

h) Marketable securities Codelco 88 Marketable securities include mutual fund units and other easy to settle instruments stated at the lower of cost or market value.

i) Inventories

Inventories are valued at cost, which does not exceed their net realization value. Cost has been determined using the following methods:

- Finished products and products in process According to the absorption costing method finished products and products in progress are valued at average production cost. Production costs include depreciation of property, plant and equipment and indirect expenses.

- Materials in warehouse Materials in warehouse are valued at acquisition cost.

The Company determines an obsolescence provision considering the permanence in stock of materials in warehouse with slow turnover.

-Materials in transit At cost incurred through year-end.

j) Allowance for doubtful accounts

Management estimates the allowance for doubtful accounts based on its experience and analysis of the portfolio and of its aging. Simplified notes to the consolidated financial statements As of December 31, 2002 and 2001 k) Property, plant and equipment

Property, plant and equipment are expressed in US dollars and valued at historical cost increased based on technical appraisals performed by The American Appraisal Co. and recorded during 1982 to 1984, net of accumulated depreciation.

Construction in progress includes the values invested in property, plant and equipment under construction and in mining development projects. l) Depreciation

Depreciation of property, plant and equipment is calculated using the straight-line method, the book values of property, plant and equipment, including the revaluation indicated in Note 2(k) above, and the estimated useful lives of the assets. m) Exploration, mine development and mine operating costs

When it is feasible that these expenses will generate revenues in the future, these expenses are recorded in income and amortized in the period in which revenue is generated. In the event that it is not clear whether they will generate revenues 89 Annual Report 2002 in the future, these expenses are recorded in income n) Leased assets

Property, plant and equipment recorded by the subsidiaries through financial leasing contracts are recorded as Other fixed assets. These assets have been valued at their current value applying the implicit interest rate in the contracts and are depreciated using the straight-line method based on the useful lives of the assets. The Company does not legally own these assets until it exercises the respective purchase option. o) Investments in related and other companies

Investments in domestic and foreign related companies are valued using the equity method in accordance with Technical Bulletins issued by the Chilean Association of Accountants. Chilean equity method investments, which are accounted for in Chilean pesos and are controlled in that currency, are expressed in US dollars at year-end. Valuation differences not arising from proportional recognition of accrued income, beginning on January 1, 2002 recognized in the Other reserves account within Equity. For the purposes of applying the equity method, investments in foreign subsidiaries are controlled in US dollars.

Unrealized gains related to investments in related companies are credited to income in relation to the amortization of the goods transferred or mine production, where applicable.

Investments in other companies are presented at acquisition cost adjusted for price-level restatement, which does not exceed market value. p) Intangibles

Intangibles are recorded at the value of the effective disbursements made and are amortized in accordance with Technical Bulletin N° 55 issued by the Chilean Association of Accountants.

q) Income tax and deferred income taxes

The Company provides for income taxes in accordance with current regulations, including the first category tax of 15% for 2001 and an additional 40% tax applied to state-owned entities as specified by Decree Law N° 2398. Law N° 19753 established a gradual increase in the first category tax rate to 16% for 2002, to 16.5% for 2003 and 17% for 2004 and thereafter.

The Company recognizes the effects of deferred income taxes arising from temporary differences, which have a different treatment for book and tax purposes, in accordance with the Technical Bulletins issued by the Chilean Association of Accountants and the regulations of the Chilean Superintendency of Securities and Insurance.

r) Staff severance indemnities Codelco 90 The Company has an agreement with its employees for payment of staff severance indemnities. It is Codelco’s policy to make a provision for the total accrued obligation at the undiscounted current cost.

s) Revenue recognition

Revenue is recognized at the time of shipment or delivery in conformity with contractual agreements and is subject to variations in contents and/or the sales price at the transaction settlement date. A provision is made for estimated decreases in sales values on unsettled operations at the end of the year based on the information available as of the date the financial statements are prepared.

t) Futures contracts

The Company’s contracts in futures markets are entered into based on the following hedging policies:

- Hedging operations in metal futures markets are entered into in order to protect the Company from risks inherent to the fluctuation of the price of metals. This hedging policy has the purpose of protecting cash flows associated with sales operations and therefore these operations have been considered as hedging contracts for expected transactions. In accordance with the provisions of Technical Bulletin N° 57 issued by the Chilean Association of Accountants, the result of these hedging transactions is recorded at the date of settlement of the operations.

- Hedging policies for exchange rates and interest rates. Exchange rate hedges include exchange insurance contracts, which mitigate the risk of fluctuations between the UF and the US$ exchange rate and interest rate hedges include contracts at fixed interest rates for future obligations. Simplified notes to the consolidated financial statements As of December 31, 2002 and 2001

- The results of the forward foreign exchange contracts are recorded as of the date of maturity or settlement of the respective contracts, in conformity with Technical Bulletin N° 57 issued by the Chilean Association of Accountants.

- The results of the hedging contracts for fixing interest rates for future liabilities are amortized over the terms of those liabilities.

Operations carried out in futures markets are not of a speculative nature. u) Computer software

Computer systems developed through the use of the Company’s own human resources and materials are charged to income in the period in which they are incurred.

In accordance with Circular N° 981 dated December 28, 1990 issued by the Superintendency of Securities and Insurance, computer systems acquired by the Company are capitalized at acquisition cost plus all associated costs, and are amortized over a period not exceeding four years. 91 Annual Report 2002 v) Research and development expenses

Research and development expenses are charged to income as incurred. w) Statement of cash flows

Cash and cash equivalents includes unrestricted cash and bank balances, time deposits and financial instruments, classified as short-term marketable securities, with maturity within 90 days, in accordance with Technical Bulletins issued by the Chilean Association of Accountants and the regulations of the Chilean Superintendency of Securities and Insurance.

The Company considers all cash flows from operating, investing or financing activities as required by Technical Bulletins issued by the Chilean Association of Accountants and the regulations of the Chilean Superintendency of Securities and Insurance. x) Bonds

Bonds are presented at the amount of capital owed plus accrued interest at each year-end. y) Environmental exist costs

The Company has established a policy of accruing for future environmental exit costs, which mainly relate to the situation of tailing dams, which subsequent to the end of their useful lives, continue to generate expenses. This policy provides for the allocation of environmental exit costs over their exploitation stage. z) Law N° 13196

Law N° 13196 requires the payment of a 10% contribution to the Chilean government on the export value of own copper and related by-products.

aa) Cost of sales

The cost of sales includes direct and indirect costs and depreciation and amortization associated with the production process.

ab) Cost of bond issuance

The total amount of the cost of bond issuance is recorded against income for the period, as established in Circular N° 1370 dated January 30, 1998 issued by the Superintendency of Securities and Insurance.

ac) Reclassifications

Codelco Certain amounts in the 2001 financial statements have been reclassified for comparative purposes with the 2002 financial 92 statements.

Note 03 Changes in Accounting Principles

In accordance with Technical Bulletin No. 64 issued by the Chilean Association of Accountants, beginning January 1, 2002, on investments in subsidiaries, foreign currency exchange differences arising from translation of the amounts of subsidiaries whose accounting records are maintained in Chilean pesos are recorded in equity accounts. Previously, such exchange differences were recognized in income. The effect of this change in accounting principle was the recognition in 2002 of a charge to Other reserves within Equity of ThUS$ 15,352 with its respective effect on income.

As of December 31, 2002, there were no other changes in accounting policy compared to the accounting principles used in the prior year. Simplified notes to the consolidated financial statements As of December 31, 2002 and 2001

Note 04 Short-term and long-term receivables (in thousands of US$)

Current assets Long-term assets 2002 2001 2002 2001

Trade receivables 227,556 207,253 0 0 Estimate of uncollectible balances (2,335) (2,285) (0) (0) 225,221 204,968 0 0

Notes receivable 2,622 129 0 0

Other receivables 146,808 202,505 63,635 52,360 Estimate of uncollectible balances (14,076) (13,910) (0) (0) 132,732 188,595 63,635 52,360 93 Note 05 Transactions with Related Companies Annual Report 2002

The Company’s policies for transactions with related companies are specifically defined by the Company’s Board of Directors and regulated by the Company’s management.

The Company, acting in accordance with current regulations applicable and within the normal scope of its business, performs transactions with related entities or parties, under fair conditions, which are similar to those usually prevailing in the market at the time of their performance.

a) Notes and accounts receivable (in thousands of US$)

Accounts receivable from related companies are valued in United States dollars and are subject to interest rates which do not exceed market conditions.

Short term Long term Name of the company 2002 2001 2002 2001

Minera Pecobre S.A. de C.V. 902 309 0 0 Sociedad Contractual Minera El Abra 20,508 3,064 35,487 34,434 Electroandina S.A. 244 0 45,400 45,320 Agua de La Falda S.A. 39 127 0 0

Total 21,693 3,500 80,887 79,754 b) Notes and accounts payable (in thousands of US$)

Short term Long term Name of the company 2002 2001 2002 2001

Electroandina S.A. 11,891 3,238 0 0 Sociedad Contractual Minera El Abra 8,955 7,829 0 0

Total 20,846 11,067 0 0

c) Composition of transactions (in thousands of US$)

The main transactions with related companies relate to commercial and financial operations. The former refer to the purchase and sale of products and the latter refer mainly to loans in current accounts which are subject to restatements and interest under the payment conditions agreed. The composition of amounts related to these transactions with subsidiaries (in thousands of US$) were as follows:

Codelco

94 2002 2001 Amount Effect on Amount Effect on Name of the company Description of the transaction income income

Electroandina S.A. Purchase of supplies 117,964 (117,964) 127,225 (127,225) Electroandina S.A. Interest 1,006 1,006 0 0 Sociedad Contractual Minera El Abra Purchase of products 170,224 (170,224) 139,187 (139,187) Sociedad Contractual Minera El Abra Sale of products 175,477 175,477 26,764 26,764 Sociedad Contractual Minera El Abra Loan and interest 1,052 1,052 34,434 0 Agua de La Falda S.A. Sale of services 345 345 641 641

Note 06 Inventories

The breakdown of inventories as of December 31, 2002 and 2001 is as follows: (in thousands of US$):

2002 2001

Finished products 210,680 182,957 Work in progress 171,396 202,812 Materials in warehouse and others 112,503 123,503

Total 494,579 509,272

The value of inventories is presented net of the obsolescence provision for materials in warehouse of ThUS$30,061 and ThUS$25,951 as of December 31, 2002 and 2001, respectively. Simplified notes to the consolidated financial statements As of December 31, 2002 and 2001

Note 07 Income and deferred income taxes

In accordance with Law N° 19753 and Technical Bulletin N° 71 issued by the Chilean Association of Accountants, the Company has recognized the effects of the increase in the first category income tax rate

This recognition resulted in 2001, a greater charge to income on income tax amounting to ThUS$ 34,259. Deferred income taxes determined according to the criteria stated in Note 2 (q) represent a net total liability of ThUS$ 906,568 and ThUS$ 827,827 as of December 31, 2002 and 2001, which is detailed as follows:

a) Deferred taxes (in thousands of US$)

2002 2001

Asset Liability Asset Liability Accounts Short-term Long-term Short-term Long-term Short-term Long-term Short-term Long-term

Temporary differences

Allowance for doubtful accounts 4,094 7,130 0 0 3,987 5,838 0 0 95 Annual Report 2002 Vacations accrual 25,887 0 0 0 27,252 0 0 0 Depreciation of property, plant and equipment 0 10 92,831 1,099,494 0 0 45,685 1,096,450 Other events 7,277 30,814 880 5,190 12,631 18,076 42 252 Obsolescence 17,535 0 0 0 14,757 0 0 0 Contingencies 0 38,326 0 0 0 44,701 0 0 Environmental exit costs provision 0 40,885 0 0 0 32,598 0 0 Hedging of bonuses 0 0 5,951 27,457 0 0 2,330 11,265 Collective bargaining bonus 0 0 0 15,456 0 0 0 22,689 Unrealized gains 25,673 143,060 0 0 18,089 172,957 0 0

Total 80,466 260,225 99,662 1,147,597 76,716 274,170 48,057 1,130,656

b) Income taxes (in thousands of US$)

Item 2002 2001

Current tax expense (income tax accrual) (830) (2,186) Effects due to assets or liabilities for deferred tax for the year (77,674) (177,412) Other (charges) credits (3,291) 52,841

Total (81,795) (126,757) Note 08 Property, plant and equipment

The composition of property, plant and equipment as of December 31, 2002 and 2001 is as follows (in thousand of US$):

a) Property, plant and equipment 2002 2001

Land Land 29,338 39,090 Mining properties 158 44 Total 29,496 39,134 Buildings and infrastructure Infrastructure 1,760,642 1,736,303 Buildings 1,834,714 1,830,015 Housing 128,573 135,818 Construction in progress 873,677 435,973 Development of mines and mining operations 1,125,958 1,018,677 Forestation and forest development 900 1,006 Other construction and infrastructure of subsidiaries 63,261 4,056 Total 5,787,725 5,161,848

Codelco Machinery and equipment 96 Machinery and equipment 4,677,701 4,626,424 Transportation equipment 593,370 541,510 Furniture and fixtures 26,872 33,725 Other machinery and equipment of subsidiaries 9,286 10,960 Total 5,307,229 5,212,619 Other fixed assets Other fixed assets of subsidiaries 2,178 136 Leased assets 595 722 Total 2,773 858 Technical appraisal 417,794 435,802 Property, plant and equipment, net 11,545,017 10,850,261

b) Accumulated depreciation 2002 2001

Buildings and infrastructure Infrastructure 1,413,037 1,271,119 Buildings 1,245,534 1,197,722 Housing 169,791 174,126 Development of mines and mining operations 492,890 407,502 Total 3,321,252 3,050,469 Machinery and equipment Machinery and equipment 2,961,342 2,870,511 Transportation equipment 327,016 321,272 Furniture and fixtures 25,152 31,897 Total 3,313,510 3,223,680 Accumulated depreciation of subsidiaries 5,705 3,852 Total accumulated depreciation 6,640,467 6,278,001 Simplified notes to the consolidated financial statements As of December 31, 2002 and 2001

c) Depreciation for the year 2002 2001

Buildings and infrastructure Infrastructure 66,387 63,462 Buildings 59,126 59,250 Housing 2,582 2,863 Development of mines and mining operations 97,121 84,697 Total 225,216 210,272 Machinery and equipment Machinery and equipment 214,082 206,978 Transportation equipment 45,810 39,219 Furniture and fixtures 336 367 Total 260,228 246,564 Depreciation and amortization of subsidiaries 10,306 794 Total depreciation for the year 495,750 457,630

Assets acquired through capital leases and presented under Other Fixed Assets of Subsidiaries have the following characteristics: 97 Monthly interest rate: fluctuates between 0.6% and 1.078% Annual Report 2002 Contract currency: UF Installments owed: fluctuates between 6 and 12 months (includes purchase option) Capital owed: UF 6,010.78

Note 09 Investments in related companies

The detail of investments in related companies which have not consolidated their financial statements with the Company as of December 31, 2002 and 2001 is as follows (in thousands of US$):

Porcentage Accrued Unrealized Book value of Company Nº of shares owned income results the investment

2002 2001 2002 2001 2002 2001 2002 2001

Agua de La Falda S. A. 17,052 49.00 49.00 (151) (1,715) 0 (1,860) 5,987 6,729 Minera Pecobre S.A. de CV. 481,794 49.00 49.00 (2,354) (2,475) 0 0 559 720 Electroandina S.A. 126,319,895 34.80 34.80 (529) (6,457) (57,503) (75,661) 41,133 29,620 Inversiones Tocopilla Ltda. 0 49.00 49.00 (5,677) (11,175) (20,684) (27,215) 105,786 91,172 Sociedad Contractual Minera El Abra 0 49.00 49.00 (38,995) (27,261) (217,714) (224,652) 52,431 84,488 Minera Yabricoya SCM 0 45.00 45.00 4 4 0 0 45 44 Inversiones Mejillones S.A. 18,671 34.80 0.00 (300) 0 0 0 22,180 0 Inversiones Enercobre S.A. 0 0.00 98.94 0 39 0 0 0 204 Inversiones Cobre Dos S.A. 0 0.00 95.24 0 61 0 0 0 153

Total (295,901) (329,388) 228,121 213,130 In general, the Company’s foreign subsidiaries contribute to facilitate the commercial management of the Company in different foreign markets

The Company has not assumed any liabilities as hedging instruments to cover investments abroad.

A brief explanation of the main companies in which the Company has interests is detailed as follows:

Agua de la Falda S.A. In 1996, Agua de la Falda S.A. was formed by Codelco (49%) and Minera Homestake (51%).

The company's business objective is the exploration and exploitation of gold and other ore deposits in Region III of Chile.

Minera Pecobre S.A. de C.V. Minera Pecobre S.A. de C.V. is a Mexican company with variable capital formed by the Mexican company Minas Peñoles S.A. de C.V. and Codelco, with share holdings of 51% and 49%, respectively.

The company’s line of business is the exploration of copper and by-products in mining lot concessions in the state of Codelco Sonora, Mexico. Through other mining companies, the company also explores, processes and disposes of ore found 98 in the mining lots.

Inversiones Tocopilla Ltda. and Electroandina S.A. Inversiones Tocopilla Ltda. is a holding company in which Inversora Eléctrica Andina S.A. (a consortium of Powerfin S.A. of Belgium, Iberdrola S.A. of Spain and Enagas S.A. of Chile) has a 51% interest and in which Codelco holds 49%.

The principal business of Electroandina S.A. is the generation, transmission and distribution of electric energy in Region II of Chile. Inversiones Tocopilla Ltda. holds 65.2% and Codelco holds 34.8%. The main assets of Electroandina S.A. were acquired from the Company’s former Tocopilla Division

Sociedad Contractual Minera El Abra Sociedad Contractual Minera El Abra was formed in 1994 by Codelco-Chile (49%) and Cyprus El Abra Company (51%), with Cyprus Amax Minerals Company guarantor, to develop and exploit the El Abra deposit.

Codelco’s investment in the project consisted of the contribution of a number of mining properties. The financing agreements for the project became effective September 15, 1995 and include the following obligations during the term of the agreements:

a) A long-term trading agreement with Codelco Services Ltd. for a portion of the production of El Abra.

b) The commitment from the partners to maintain majority ownership of the property of Sociedad Contractual Minera El Abra.

c) A pledge on the shares of Sociedad Contractual Minera El Abra in favor of the institutions which granted the loans. Simplified notes to the consolidated financial statements As of December 31, 2002 and 2001

Inversiones Mejillones S.A. Inversiones Mejillones S.A. was formed as a Company on March 20, 2002, with a direct ownership by 34.8% of Codelco Chile and 65.2% of Inversiones Tocopilla Ltda. Codelco has an ownership in the capital of Inversiones Tocopilla Ltda. by 49%.

Inversiones Mejillones S.A., was formed with the objectives to acquire 82.34% of the shares of Empresa Eléctrica del Norte S.A. (Edelnor), reschedule its financial liabilities and coordinate the operations of Electroandina (of which Codelco and Inversiones Tocopilla are partners) and Edelnor.

Additionally, the Company has recorded unrealized gains related to the contribution of mining properties, property, plant and equipment and company rights.

The most important transactions are detailed as follows:

Sociedad Contractual Minera El Abra The Company contributed mining properties to Sociedad Contractual Minera El Abra in 1994, which at December 31, 2002 generated a deferred gain in the amount of ThUS$6,937 (ThUS$ 24,033 in 2001.) 99 Annual Report 2002

Electroandina S.A. Generated in 1996, which corresponds to the negative goodwill for the contribution in fixed assets, the realizable gain is expected to be realized in ten years up to 2006. During 2002, gains for an amount of ThUS$18,159 (ThUS$18,159 in 2001) were recognized

Inversiones Tocopilla Ltda. Generated in 1996, which corresponds to the negative goodwill related to the initial contribution of social rights, the gain is expected to be realized in ten years up to 2006. During 2002, gains for an amount of ThUS$6,531 (2001, ThUS$6,531) were recognized.

Note 10 Other Assets

Other assets as of December 31, 2002 and 2001 are as follows: (in thousands of US$):

2002 2001

Initial filling of plant (1) 16,263 11,312 Nueva Calama integration project 74,037 34,675 Interest rate hedging (2) 58,610 26,698 Deferred expenses of collective negotiation (3) 27,116 41,559 Complementary activities (4) 30,981 4,828 Hedging for issuance of bonuses (5) 9,529 0 Other 1,923 86

Total other assets 218,459 119,158 (1) Corresponds mainly to expenses for initial filling of the Radomiro Tomic Division Leaching Plant, which are amortized in five years starting in 2000.

(2) Corresponds to variations occurred in hedging operations and interest rate related to publicly debt obligations, which are amortized using the straight-line method over the maturity term of the respective obligations up to September 2008.

(3) Corresponds to the bonus for completion of the collective negotiation, which is amortized over the term of each collective bargaining agreement.

(4) Corresponds to disbursements related to improvements of tailing dams and hydro and geological activities, which are amortized over a maximum period of 6 years, depending on the related activity.

(5) Corresponds to disbursements related to the issuance of bonuses in Chile and its conversion from UF to US$. These are amortized using the straight-line method until the maturity date of these bonuses (2012).

Codelco 100 Note 11 Short-term debt due to banks and financial institutions

Although the Company is authorized to maintain its accounting in US dollars for the purpose of this Note those obligations maintained in US dollars have been considered to be balances maintained in foreign currency (in thousands of U,S, dollars):

- Short-term

US$ Non adjuntable Ch$ Total Bank or financial institution 2002 2001 2002 2001 2002 2001 San Paolo IMI SpA 25,116 35,497 0 0 25,116 35,497 Santander Central Hispano 0 60,738 0 0 0 60,738 Standard Chartered Bank 0 40,510 0 0 0 40,510 Banco Bilbao Vizcaya 0 30,102 0 0 0 30,102 The Bank of Tokio-Mitsubishi 35,117 0 0 0 35,117 0 The Royal Bank of Canada 50,526 0 0 0 50,526 0 Toronto Dominion Bank 35,000 0 0 0 35,000 0 Banco de Chile 30,069 0 0 0 30,069 0 ABN AMRO Bank (Chile) 30,189 0 0 0 30,189 0 Corpbanca 0 0 175 273 175 273 Other 83 0 0 0 83 0

Total 206,100 166,847 175 273 206,275 167,120 Principal owed 205,000 165,000 174 266 205,174 165,266

Annual average interest rate 1.99 3.07 0 0 0 0 Obligations in foreign currency (%) 100.00 100.00 Simplified notes to the consolidated financial statements As of December 31, 2002 and 2001

- Largo plazo porción corto plazo

US$ Bank or financial institution 2002 2001

JP Morgan - The Chase Manhattan Bank 276,806 152,243

Total 276,806 152,243

Principal owed 275,000 150,000

Annual average interest rate 1.70 2.90 Obligations in foreign currency (%) 100.00 100.00 101 Annual Report 2002

Note 12 Long-term debt due to banks and financial institutions

These obligations as of December 31, 2002 and 2001, accrue interest at different rates based on Libor.

Although the Company is authorized to maintain its accounting in US dollars for the purpose of this Note those obligations maintained in US dollars have been considered to be balances maintained in foreign currency.

Yeras to maturity Total long-term at the date of Annual average After 1 years After 2 years close of finacial statements Bank or financial institution interest rate % but within 2 years but within 3 years 2002 2001

JP Morgan-The Chase Manhattan Bank 1.70 300,000 0 300,000 875,000 Citibank N.A. 1.88 0 300,000 300,000 0 Total 300,000 300,000 600,000 875,000 Percentage of obligations in foreign currency (%) 100.00 100.00 Note 13 Short and long-term bonds payable

On May 4, 1999, the Company issued and placed bonds in the North American market, under Regulation 144-A, for a nominal amount of ThUS$ 300,000. These bonds mature in a single installment on May 1, 2009, with an interest rate of 7.375% per annum with interest paid semi-annually. As of December 31, 2002 and 2001 the Company presents in current liabilities a balance amounting to ThUS$ 3,667 which corresponds to the interest of each year.

On November 18, 2002, the Company issued and placed bonds in the domestic market, under the regulations of the Superintendency of Securities and Insurance. This bond was issued by a nominative amount of UF 7,000,000, (equivalent to ThUS$ 162,643) of a single series denominated A Series, and is comprised by 70,000 titles of UF 100 each. These bonds mature in a single installment on September 1, 2012, with an interest rate of 4.0% per annum with interest paid semi-annually. As of December 31, 2002, the Company presents in current liabilities a balance of ThUS$ 2,212, which corresponds to the interest.

On November 30, 2002, the Company issued and placed bonds in the North American market, under Regulation 144- A, for a nominal amount of ThUS$ 435,000. These bonds mature in a single installment on November 30, 2012, with an

Codelco interest rate of 6.375% per annum with interest paid semi-annually. As of December 31, 2002, the Company presents 102 in current liabilities a balance of ThUS$ 2,374, which corresponds to the interest.

Note 14 Provisions and write-offs

The composition of Current and Long-term Provisions (in thousands of Chilean pesos) as of December 31, 2002 and 2001, is as follows:

Short-term Long-term Item 2002 2001 2002 2001 Hedging of interest rate 195 2,517 0 0 Freight-out and handling (1) 2,674 3,277 0 0 Customs, freight-in and related costs (2) 24,142 18,242 0 0 Employee pension plan 1,875 895 31,475 28,652 Staff severance indemnities 24,543 26,513 363,488 370,980 Export tax (Law 13196) 26,249 10,153 0 0 Payroll (3) 25,581 30,061 0 0 Vacations 46,368 47,733 0 0 Miscellaneous 23,674 28,153 120 1,576 Environmental exit costs (4) 0 0 71,728 57,190 Contingencies 0 0 68,351 75,376

Total 175,301 167,544 535,162 533,774 Simplified notes to the consolidated financial statements As of December 31, 2002 and 2001

(1) Corresponds to provision related to sales, including freight expenses, loading, and unloading not invoiced as of the end of the period.

(2) Corresponds to provision for customs duties, acquisition freight charges, and electricity, among others.

(3) Corresponds to benefits granted to the Company’s employees which are accrued as of the date of close of these financial statements, among which Christmas and Independence day bonuses, other bonuses, legal employee bonus and other benefits are included.

(4) Corresponds to the policy established by the Company with respect to the provision of future environmental exit costs, which principally relate to tailing dams.

Note 15 Staff severance indemnities

The movement in the provision for staff severance indemnities is summarized as follows as of December 31, 2002 and 103 Annual Report 2002 2001 (in thousands of US$):

Current Liabilities Long-term liabilities Movements 2002 2001 2002 2001

Balance as of January 1 26,513 30,537 370,980 391,095 Payments made (13,819) (15,081) 0 0 Provision for the year (including effects for variations in exchange rates) 0 0 4,357 (9,058) Transfer to short-term 11,849 11,057 (11,849) (11,057)

Total 24,543 26,513 363,488 370,980 Note 16 Minority interest

The detail of minority interest, included in liabilities and net income (in thousands of Chilean pesos) is as follows:

2002 2001 Companies Liabilities Net income Liabilities Net income

Asociación Garantizadora de Pensiones 20 2 25 4 Biosigma S.A. 453 40 0 0 CMS Chile S.A. (1) 0 0 0 Complejo Portuario Mejillones S.A. 0 0 6 (1) Inst. de Innovación en Minería y Metalurgia S.A. 2 (1) 2 0 Isapre Chuquicamata Ltda. 28 0 29 0 Isapre Río Blanco Ltda. 1 0 0 0 Inversiones Cobre Dos S.A. 0 0 426 3 Inversiones Enercobre S.A. 0 0 70 0

Codelco Sociedad Contractual Minera Los Andes 0 0 8,543 0 104 Sociedad Elaboradora de Cobre Chilena Ltda. 0 8 6 (4) Sociedad Geotérmica del Norte S.A. (935) 1,559 0 0

Total (432) 1,608 9,107 2

Note 17 Changes in Shareholders’ Equity

The Company was formed by Law Decree No. 1350 dated 1976, which establishes that all net income generated by the Company goes to the benefit of the Chilean Government after deducting amounts that, with a charge to net earnings for each year, must be maintained in Other Reserves as established in Article Six of Decree Law N° 1350, dated 1976, as well as included in proposal made by the Board of Directors to the Ministry of Mining and the Ministry of Finance. Simplified notes to the consolidated financial statements As of December 31, 2002 and 2001

The composition of Other Reserves as of December 31, 2002 is as follows (in thousands of US$):

Detail Year Accumulated

Capitalization of net income 25,574 592,703 (Exempt Decree Ministry of Mining and Treasury Department)

Cumulative translation adjustment – subsidiaries (1) (15,352) (15,352)

Residential programs 0 35,100

Asset revaluation reserve Decree Law N°3648 0 624,568

Balance of Other Reserves as of December 31, 2002 10,222 1,237,019

(1) The composition of the cumulative translation adjustment recorded in the Other Reserves corresponds to the investments 105 Annual Report 2002 in subsidiaries whose currency is other than United States dollar, is as follows (in thousands of US$):

Hospital del Cobre S. A. 15 Instituto de Innovación en Minería y Metalurgia S.A. 132 Compañía Contractual Minera Los Andes 514 CMS Chile S.A. 704 CMS Tecnología S.A. 126 Electroandina S.A. 6,116 Inversiones Tocopilla Ltda. 6,675 Complejo Portuario Mejillones S.A. 853 Santiago de Río Grande S.A.C. 1 Sociedad Elaboradora de Cobre Chilena Ltda. 182 Yabricoya SCM 3 Asociación Garantizadora de Pensiones 62 Isapre Chuquicamata Ltda. 77 Isapre San Lorenzo Ltda. (36) Isapre Rio Blanco Ltda. 25 Compañía Minera Picacho SCM 66 Geotermica del Norte S.A. 42 Biosigma S.A. 13 Inversiones Mejillones S.A. (218)

Total 15,352 Movements in shareholders’ equity during 2002 and 2001 are detailed as follows (in thousand of US$):

2002 2001

Capital Otras Dividendos Resultados Capital Otras Dividendos Resultados Movements pagado reservas provisorios del ejercicio pagado reservas provisorios del ejercicio

Beginning balance 1,524,423 1,226,797 (76,853) 25,574 1,524,423 1,215,885 (168,919) 205,387 Distribution of prior year income 0 0 0 0 0 0 168,919 (168,919) Final dividend of prior year 0 0 0 0 0 0 0 (25,556) Capitalization of reserves and /or revenues 0 25,574 0 (25,574) 0 10,912 0 (10,912) Net changes in equity in subsidiaries and affiliated companies 0 (15,352) 0 0 0 0 0 0 Net income for the year 0 0 0 48,476 0 0 0 25,574 Provisional dividends for fiscal benefit 0 0 0 0 0 0 (76,853) 0 Total 1,524,423 1,237,019 (76,853) 48,476 1,524,423 1,226,797 (76,853) 25,574

Codelco The amount of ThU$76,853, presented in the chart above corresponds to surplus advances to the Chilean Treasury. 106

Note 18 Other non-operating income and expenses

As of December 31, 2002 and 2001, other non-operating income and expenses are detailed as follows (in thousands of US$):

a) Other non-operating income Item 2002 2001

Forward contracts 2,539 247 Fines to suppliers 3,452 2,343 Calama plan 0 3,230 Miscellaneous 38,328 46,923 Sale of bases 70 80 Miscellaneous sales 5,031 7,050 Sales of services 8,216 8,080 Sales of fixed assets 2,330 1,005 Recovery of future operations 732 8,000 Realized gain in contributions to companies 43,625 52,816 Rentals 4,438 4,381 Insurance recoveries 1,355 700

Total 110,116 134,855 Simplified notes to the consolidated financial statements As of December 31, 2002 and 2001

b) Other non-operating expenses

Item 2002 2001 Export tax (Law N° 13196) 240,071 260,070 Pre-investment expenses 41,789 25,833 Updating of severance indemnities 20,783 24,758 Contingency provision 12,000 12,220 Retirement plans 11,478 11,828 Other personnel expenses 7,679 10,888 Vacation accrual 7,050 9,171 Cost of sales in services 4,087 2,803 Cost of rents 462 180 Costs of miscellaneous sales 5,156 5,906 Environmental exit costs 19,080 8,523 Amortization of collective bargaining bonus 18,587 8,293 Other expenses 15,915 11,796 Write-offs of obsolete property 7,652 3,010 Losses on impairment of fixed assets 13,686 2,599 107 Currency hedging 1,021 1,551 Annual Report 2002 Labor related sicknesses 933 1,085 External bonuses expenses 7,791 0 Domestic bonuses expenses 3,098 0 Former Tocopilla Division expenses 967 704 Value added tax not recovered 1,601 601 Inventory of materials 1,157 466 Mining licenses 228 231

Total 442,271 402,516

Note 19 Price-Level Restatement

As of December 31, 2002 and 2001, the composition of price-level restatement pertaining to the statement of income is detailed as follows (in thousands of US$): 2002 2001 Property, plant and equipment 1,501 188 Current assets and other 107 306 Other non-monetary assets (1) 434 Expense and costs accounts 95 0 Total credits to net asset 1,702 928

Shareholders’ equity (922) (90) Non-monetary liabilities (465) (106) Income accounts (89) (25)

Total charges to net liability (1,476) (221)

Total 226 707 Note 20 Foreign currency translation

The (charge) credit to income for foreign currency translation as of December 31, 2002 and 2001 is as follows (in thousands of US$):

ASSETS (CHARGES) / CREDITS Currency 2002 2001

Cash Ch $ (3,126) 1,979 Other receivables Ch $ 790 1,041 Trade receivables Britissh Sterling Pounds 0 (46) Trade receivables Ch $ 1,365 0 Trade receivables Euro 0 (58) Other current assets Ch $ (7,140) (11,042) Investments in related companies Ch $ 2,834 (29,306) Long-term receivables Ch $ (1,274) (2,970) Other Ch $ (3,271) (6,562)

Total (Charges) Credits (9,822) (46,964) Codelco 108 LIABILITIES (CHARGES) / CREDITS Accounts payable Ch $ 7,398 13,848 Other payables Ch $ (489) (697) Other provisions Ch $ 0 6,271 Other current liabilities Ch $ (673) (19) Other long-term liabilities Ch $ 36,492 55,514

Total (Charges) Credits 42,728 74,917

Total 32,906 27,953

Note 21 Expenses of issuance and placement of shares and debt titles

Expenses incurred in the issuance and placement of bonds performed in 2002, as detailed in Note 13, were recorded against net income of 2002. Simplified notes to the consolidated financial statements As of December 31, 2002 and 2001

Note 22 Statement of Cash Flows

The detail of “Other” included in the statements of cash flows is as follows (in thousands of US$):

2002 2001

Other income received: Recovery of V,A,T 320,620 299,945 Other 57,305 59,388 Total 377,925 359,333

Other expenses paid: Contribution to the Chilean Treasury Law N° 13.196 222,741 256,708 Financial coverage 50,642 4,747 Total 273,383 261,455

Other investing income: Recovery of loans granted to employees 29,329 29,756 Total 29,329 29,756 109 Annual Report 2002 Other investment disbursements: Loans granted to employees 24,967 60,708 Cost of transferring the mining camp 39,363 36,675 Cost of complementary operations 10,361 0 Negotiation bonus employees of Chuquicamata division 0 49,852 Community development 9,630 0 Other disbursements 1,419 0 Total 85,740 147,235

Note 23 Derivative contracts

The Company maintains contracts in place for operations of fixing prices. These contracts total FMT 279 of copper from which at year-end FMT 174 are protected and expire in June 2004.

In addition, the Company has protecting operations against variations in exchange rates which total ThUS$ 216,074, from which ThUS$ 51,592 expire in September 2003 and ThUS$ 164,482 expire in November 2012.

Likewise, as of December 31, 2002, the Company has contracts in place to fix the interest rates of debt obligations with banks and financial institutions. Payments made of these contracts amounted to deferred costs of ThUS$ 58,610 (ThUS$ 26,698 in 2001) which are amortized over the maturity term of the respective obligations from January 2003 and September 2008. Note 24 Commitments and contingencies

Codelco is involved in various pending legal actions initiated by or against the Company which, are derived from the inherent nature of the industry in which the Company operates. In general, these lawsuits are generated by civil, tax, legal and mining actions, all of which are related to the Company’s operating activities.

In the Company’s management’s and legal advisors’ opinion, these lawsuits do not represent loss contingencies for significant amounts. In addition, with respect to all these lawsuits, the Company defends its rights and uses all instances and legal and proceeding resources available.

The Company maintains no restrictions or covenants associated with obligations with banks and financial institutions or with the public.

The Company has obligations with the Chilean Treasury, generated by the regulations of Law Nº 18.634 on deferred custom duties for an amount of ThUS$ 134,312 (ThUS$ 141,358 in 2001).

Codelco Note 25 Sureties obtained from third parties 110

As of December 31, 2002 and 2001, the Company has received a number of guarantees that mainly cover obligations of suppliers and contractors related to various projects under development. Considering the large number of guarantees received as of December 31, 2002 and 2001 and the many suppliers and contractors involved, the amounts covered are presented by Division as follows (in thousands of US$):

Division: 2002 2001

Chuquicamata 46,439 16,480 Radomiro Tomic 85,651 135,943 Salvador 25,442 30,190 Andina 5,182 5,925 El Teniente 70,677 51,123 Casa Matriz 51,318 55,684 Total 284,709 295.345

Note 26 Assets and liabilities in National and Foreign Currencies

As of December 31, 2002 and 2001, foreign currency denominated assets and liabilities are as follows (in thousands of US$): Total assets Total liabilities Short term Long term Currency 2002 2001 2002 2001 2002 2001 Ch$ 424,041 322,337 246,663 172,263 425,999 366,998 U.S. dollar 6,300,416 5,790,029 781,014 662,428 2,546,656 2,208,901 Euro 3,038 3,915 0 0 0 0 British Sterling Pound 5,255 2,637 0 0 0 0 Mexican peso 215 720 0 0 0 0 Simplified notes to the consolidated financial statements As of December 31, 2002 and 2001

Note 27 Sanctions

Codelco Chile, its Directors and Management have not been subject to sanctions applied by the Superintendency of Securities and Insurance or other administrative authorities.

Note 28 Subsequent events

The Company’s management has no knowledge of significant events of a financial nature or any other nature, occurring between December 31, 2002 and the date of issuance of these financial statements (February 28, 2003) which may affect them.

Note 29 Environment

The practice of exploration and recognition of new resources, which were environmentally sustainable, has been a significant 111 concern for the Company. Consequently, since 1998 the Company defined its environmental commitments, which are Annual Report 2002 controlled through an environmental management system for explorations that has been improved in time to conform to the worldwide standard ISO 14001, which has helped the works related to geology, geochemical, geophysical and welding focused on exploration of mineral resources both in Chile and abroad.

Under these circumstances, the Radomiro Tomic Division received ISO 14001 certification. The Company expects to obtain ISO 14001 certification for its other divisions during the first half of 2003.

In conformity with this policy, in 2002 the Company has performed investments amounting to ThUS$ 93,066 (ThUS$ 49,841 in 2001) which are identifiable with environmental issues.

Juan Villarzú Rohde Francisco Tomic Errázuriz Patricio Mac-Niven Silva Mario Allende Gallardo Chief Executive Officer Corporate Vice President of Corporate Manager of Accounting Manager Human Development and Finance Shared Services Reasoned analysis of the consolidated financial statements

The purpose of the following section is to analyse and to explain the main variations occurred in the Consolidated Financial Statements of the Corporación Nacional del Cobre de Chile during the exercise that took place between December 2001 and December 2002. In what follows a summary of the information in such statements is shown.

All figures are expressed in thousands of United States dollars.

Summary of the financial indicators of the Society.

General Statement 31.12.2001 31.12.2002 Variation Ratio Ratio %

Liquidity Current assets/current liabilities (times) 1.29 1.19 (7.86) (Current assets-Inventories-Prepaid expenses)/Current liabilities (times) 0.67 0.70 4.30

Debt Total liabilities/Equity (times) 1.26 1.46 15.87 Current liabilities/Total liabilities (times) 0.24 0.26 4.97 Codelco

112 Long-term liabilities/Total liabilities (times) 0.76 0.74 (1.61) Coverage ratio (times) 0.007 0.012 61.61

Activity Rotation of accounts receivable (times) 17.5 15.5 (11.43) Recovery of bills (days) 20.57 23.23 12.93 Rotation of inventories (time) 5.47 5.05 (7.68) Permanence of inventories (days) 66 71 7.58

MUS$ MUS$ % Total liability 3,410,590 4,000,332 17.29

The net active assets increased in ThUS$ 694,756 (year 2001 ThUS$ 468,846), not taking into account depreciation. Among the main increases. Mine Development ThUS$ 5,284 (2001, ThUS$ 7,083), Mining Operations ThUS$ 99,019 (2001, ThUS$ 128,875), the remaining corresponds to constructions and works of infrastructure and other items of fixed assets.

Results 31.12.2001 31.12.2002 Variación MUS$ MUS$ %

Operational income 3,587,564 3,489,879 (2.72) Operational costs (2,920,400) (2,786,942) (4.57) Operational results 529,033 543,261 2.69 Financial expenses (99,570) (77,046) (22.62) Non-operational result (376,704) (414,598) 10.06 R.A.I.I.D.A.I.E. (1) 709,529 701,459 (1.14) Income after taxes 25,574 48,476 89.55 FMT FMT % Volume physical sales (own and of third parties) 1.989.234 1.817.302 (8,64) not including trading operations

Equity 31.12.2001 31.12.2002 Variation MUS$ MUS$ %

Equity 2,699,941 2,733,065 1.23 Fixed net assets 4,572,260 4,904,550 7.27 Total assets 6,119,638 6,732,965 10.02

Profitability 31.12.2001 31.12.2002 Variation Ratio Ratio %

Of the assets (%) 0.42 0.72 72.29 Of the equity (%) 0.95 1.77 87.25 Performance operational assets (2) 0.43 0.75 72.39

Income/Loss due to USD action Not applicable Not applicable Not applicable 113 Annual Report 2002 (1) R.A.I.I.D.A.I.E.: Results before taxes, interests, depreciation, amortization and extraordinary items. (2) Operational assets are the total assets minus the investment in other societies and related societies.

Analysis of the Market Variations During 2002, the markets in which the Corporation commercializes its products have not undergone major changes.

Analysis of the General Statement As of December 31st 2002, the current liquidity index shows a decrease compared to the previous exercise, due to the maturation of long term liability of Codelco which installments are due in 2003 and amounting to ThUS$ 275,000 (2001, ThUS$ 150,000) reclassification which was not compensated by the increase of ThUS$ 144,722 of current assets.

In the 2002 exercise, the current assets increased to ThUS$ 1,221,589 (2001, ThUS$ 1,076,867) composed mainly by term deposits for ThUS$ 141,214, sale debtors for ThUS$ 225,221, various debtors for ThUS$ 132,732, inventories for ThUS$ 494,579 and the difference is composed by other accounts of the current assets.

The fixed net asset as of December 31st 2002 was of ThUS$ 4,904,550 (2001, ThUS$ 4,572,260) composed mainly by constructions and works of infrastructure for ThUS$ 5,787,725, machinery and equipment for ThUS$ 5,307,229, accumulated depreciation for ThUS$ 6,640,467; other accounts of this item explain the difference.

As of December 31st 2002, the other assets amounted to ThUS$ 606,826 (2001, ThUS$ 470,511) composed by investment in related companies, which have not consolidated their financial statements with Codelco, ThUS$ 228,121, long term debtors ThUS$ 63,635, documents and bills to be paid related companies ThUS$ 80,887 and other various accounts.

As of December 31st 2002, the current liability amounts to ThUS$ 1,027,677 (2001, ThUS$ 834,691) and it is composed of bank debts for ThUS$ 483,081, accounts payable for ThUS$ 247,970; other accounts make up the difference. As of December 31st 2002, the long term liability reached ThUS$ 2,972,655 (2001, ThUS$ 2,575,899) composed by bank and public debts for ThUS$ 1,497,643, various provisions for ThUS$ 535,162 and deferred taxes for ThUS$ 887,372.

These figures determine the ratios and indicators shown in the previous pages.

As of December 31st 2002, the equity amounts to ThUS$ 2,733,065 (2001, ThUS$ 2,699,941). This 2002 equity includes ThUS$ 15,352, corresponding to exchange differences for conversion of related socities.

As of December 31st 2002, the total debt of the Corporation amounts to ThUS$ 4,000,332 (2001, ThUS$ 3,410,590); this determines a debt ratio for 2002 of 1.46 times (2001, 1.26 times).

Analysis of the Results During the 2002 exercise, the price of copper in the London Metal Exchange was quoted at an average of US$ 0.706 (2001, US$ 0.716) per pound.

The exploitation result of the 2002 exercise reached an income of ThUS$ 543,261, compared to ThUS$ 529,033 in 2001. The variation is the consequence of the combined effect of a decrease in the exploitation costs in ThUS$ 133,458 and Codelco

114 in the exploitation income in ThUS$ 97,685.

The decreased exploitation income is accounted for by a decrease of the income from copper sales in ThUS$ 194,994; the difference corresponds to sales of subproducts. The drop in copper sales is due to a lower amount shipped by FMT 156,016 compared to 2001 (2,089,785 FMT) with an effect of ThUS$ 257,838 lower income, and to a better price of US$ 0.6969 compared to 2001 (US$ 0.6811), which positively affected income in ThUS$ 70,423.

The exploitation income figures include the operations of the subsidiaries abroad, which jointly generated an income of ThUS$ 368,857 (2001, ThUS$ 320,350).

As a consequence of the variation experienced during the exercise, the following situations affected the exploitation results.

The total exploitation income reached ThUS$ 3,489,879, of which ThUS$ 2,990,217 correspond to copper and the difference to subproducts and others.

Regarding the sales of Codelco´s own copper, these reached 1,487,111 FMT, to which 116,470 FMT are added from trading operations performed by the subsidiary in England.

The exploitation costs, which include the cost of copper and subproducts were of ThUS$ 2,786,942.

The results of the exploitation generated a net expense of ThUS$ 414,598.

These expenses, other than the exploitation which amounted to ThUS$ 442,271, include THUS$ 240,071 corresponding to tax Law Nº 13,196, which taxes in 10% the income on exports.

The profits of Codelco (results before income tax, extraordinary items, minority interest and Law Nº 13,196) reached ThUS$ 368,734, lower than the ThUS$ 412,399 of 2001. As a consequence the liquid profits were of ThUS$ 48,476 and the results before income taxes and extraordinary items were of ThUS$ 128,663.

Analysis of the Statement of Cash Flows The net flow originated by the operation activities for the exercise ended on December 31st 2002 produced a positive flow of ThUS$ 588,892, 16.48% lower than the ThUS$ 705,157 of 2001.

This variation is accounted for by the increase in payments to suppliers and others by ThUS$ 318,402 compared to the 2001 exercise, which is not compensated by the increase in the collections of debtors for sales.

On the other hand, the financing activities generated a positive flow of ThUS$ 487,901 compared to the positive flow of ThUS$ 8,810 of the 2001 exercise. This is mainly due to the credit amortization in both years, the contribution to the Treasury in 2001 for ThUS$ 102,409 and higher loans obtained in 2002 for ThUS$ 550,258 compared to 2001, adding also the financing obtained through the placement of bonds both in the local (ThUS$ 162,643) and foreign markets (ThUS$ 435,000).

Finally, the investment activities generated a negative flow of ThUS$ 959,877 in 2002 and of ThUS$ 728,928 in 2001, 115 Annual Report 2002 corresponding in both exercises mainly to additions of Fixed Assets, Mine Developments and Mining Operations, which are included in the budgets of the Corporation.

Considering the previously mentioned flows, plus the initial balances, an effective balance of ThUS$ 153,579 was obtained for 2002, compared with ThUS$ 36,663 for 2001.

Simplified Financial Statements Corporación Nacional del Cobre de Chile Report of Independent Accountants Santiago, Chile, December 31, 2002 and 2001

To the President and Directors of Corporación Nacional del Cobre de Chile

We have audited the balance sheets of Corporación Nacional del Cobre de Chile as of December 31, 2002 and 2001, and the related statements of income and of cash flows for the years then ended. These financial statements (including the related notes) are the responsibility of the management of Corporación Nacional del Cobre de Chile. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards in Chile. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide reasonable basis for our opinion.

The financial statements referred to above have been prepared to reflect the individual financial position of Corporación 117 Nacional del Cobre de Chile, based on the criterion described in Note 2 b), before the line-by-line consolidation of the Annual Report 2002 financial statements of the subsidiaries detailed in Note 9. Consequently, for its proper interpretation, these individual financial statements should be read and analyzed together with the consolidated financial statements of Corporación Nacional del Cobre de Chile and subsidiaries, which are required by generally accepted accounting principles in Chile. These report is presented solely for the information and use of Directors and Management of Corporación Nacional del Cobre de Chile and the Superintendency of Securities and Insurance.

In our opinion, the individual financial statements referred to above, present fairly, in all material respects, the individual financial position of Corporación Nacional del Cobre de Chile as of December 31, 2002 and 2001, the results of its operations and its cash flows for the years then ended, in accordance with the accounting principles described in Note 2 b.

The accompanying footnotes, which are attached to the financial statements in the present report, relate to a summarized version of those included in the full version of the Company’s financial statements on which we issued an opinion dated February 28, 2003, which includes additional information required by a regulating body which is not indispensable for an adequate interpretation of these financial statements.

Héctor Delgado Ñ. Santiago, February 28, 2003 Balance sheets

The accompanying notes 1 to 27 form an As of December 31 of 2002 and 2001 integral part of these financial statements. (Amounts in thousands of US$)

2002 2001

ASSETS

CURRENT ASSETS: Cash 5,848 2,680 Time deposits 138,088 24,042 Marketable securities, net 1 1 Trade receivables, net 212,052 201,291 Notes receivable, net 134 114 Other receivables, net 128,257 182,942 Amounts due from related companies 26,572 35,125 Inventories, net 478,691 475,142 Income taxes recoverable 175,384 93,870 Prepaid expenses 7,108 6,918 Deferred income taxes 0 28,538 Other current assets 50 481

Total current assets 1,172,185 1,051,144

Codelco PROPERTY, PLANT AND EQUIPMENT: 118 Land 25,668 25,787 Buildings and infrastructure 5,724,464 5,157,792 Machinery and equipment 5,297,943 5,202,381 Revaluation from fixed asset technical appraisal 417,794 435,802 Less: Depreciation (6,634,762) (6,274,149)

Property, plant and equipment, net 4,831,107 4,547,613

OTHER ASSETS: Investments in related companies 276,734 245,443 Investments in other companies 335 147 Long-term receivables 63,929 44,014 Amounts due from related companies 117,936 88,509 Intangibles 3,442 3,827 Less: amortization (967) (805) Other assets 216,780 119,325

Total other assets 678,189 500,460

TOTAL ASSETS 6,681,481 6,099,217 Balance sheets

The accompanying notes 1 to 27 form an As of December 31 of 2002 and 2001 integral part of these financial statements. (Amounts in thousands of US$)

2002 2001

LIABILITIES AND EQUITY

CURRENT LIABILITIES: Short-term debt due to banks and financial institutions 206,017 166,847 Current portion of long-term due to banks and financial institutions 276,806 152,243 Current portion of bonds payable 8,253 3,667 Accounts payable 230,776 263,121 Other payables 18,370 13,488 Amounts due to related companies 23,197 12,567 Provisions 171,093 164,963 Withholdings 45,389 41,565 Deferred income 1,170 2,608 Deferred income taxes 19,451 0 Other current liabilities 2,867 951

Total current liabilities 1,003,389 822,020

LONG-TERM LIABILITIES:

Due to banks and financial institutions 600,000 875,000 119 Annual Report 2002 Bonds payable 897,643 300,000 Provisions 554,371 536,830 Deferred income taxes 887,327 858,201 Other long-term liabilities 5,686 7,225

Total long-term liabilities 2,945,027 2,577,256

EQUITY: Paid-in capital, no par value 1,524,423 1,524,423 Other reserves 1,237,019 1,226,797 Net income for the year 48,476 25,574 Provisional dividends for fiscal benefit (76,853) (76,853)

Total equity 2,733,065 2,699,941

TOTAL LIABILITIES AND EQUITY 6,681,481 6,099,217 Staments of in income

The accompanying notes 1 to 27 form an For the years ended December 31, 2002 and 2001 integral part of these financial statements. (Amounts in thousands of US$)

2002 2001

Sales 3,121,022 3,267,214

Cost of sales (2,416,764) (2,600,765)

Gross profit 704,258 666,449

Administrative and selling expenses (143,582) (137,665)

OPERATING INCOME 560,676 528,784

Interest income 9,258 10,741 Equity participation in income of related companies 1,407 3,613 Other non-operating income 106,134 129,586 Equity participation in losses of related companies (67,379) (51,505) Interest expense (76,152) (99,209) Other non-operating expenses (438,347) (399,684) Foreign currency translation 33,787 27,953

NON-OPERATING LOSS (431,292) (378,505) Codelco 120 INCOME BEFORE INCOME TAXES 129,384 150,279

Income taxes (80,908) (124,705)

NET INCOME FOR THE YEAR 48,476 25,574 Statements of cash flows

The accompanying notes 1 to 27 form an For the years ended December 31, 2002 and 2001 integral part of these financial statements. (Amounts in thousands of US$)

2002 2001 CASH FLOWS FROM OPERATING ACTIVITIES: Collections from customers 3,147,986 3,243,478 Interest received 5,180 0 Dividends and other distributions 393 4,317 Other income received 371,862 387,182 Payments to suppliers and personnel (2,190,722) (2,261,350) Payment of interest (69,676) (98,705) Payment of income taxes (80,000) (2,565) Other expenses (273,383) (261,455) Payment of value added tax and other similar taxes (318,517) (306,674)

Net cash provided by (used in) operating activities 593,123 704,228

CASH FLOWS FROM FINANCING ACTIVITIES: Financing obtained 550,000 1,290,416 Bonds payable 597,643 0 Dividends paid 0 (102,409) Payment of loans (660,000) (1,155,000) Other disbursements for financing 0 (24,197) 121 Annual Report 2002 Net cash provided by (used in) financing activities 487,643 8,810

CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales of fixed assets 542 0 Proceeds from sales of permanent investments 2,552 0 Proceeds from sales of other investments 0 24,073 Other loans received from related companies 0 28,050 Other investing income 29,329 29,756 Additions to property, plant and equipment (831,234) (585,754) Long-term investments (61,803) (38,315) Loans granted to related companies (17,198) (39,503) Other investment disbursements (85,740) (147,235)

Net cash provided by (used in) investing activities (963,552) (728,928)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 117,214 (15,890)

CASH AND CASH EQUIVALENTS BEGINNING OF YEAR 26,723 42,613

CASH AND CASH EQUIVALENTS END OF YEAR 143,937 26,723 Reconciliation of net cash flows from operating activities to net income

The accompanying notes 1 to 27 form an For the years ended December 31, 2002 and 2001 integral part of these financial statements. (Amounts in thousands of US$)

2002 2001

Net income for the year 48,476 25,574

Loss (gain) on sales of fixed assets 11,356 0

Charges (credits) to income which do not represent cash flows: Depreciation 388,323 372,139 Amortization 97,121 84,697 Write-offs and provisions 46,667 278,531 Equity participation on income of related companies (1,407) (3,613) Equity participation in losses of related companies 67,379 51,505 Foreign currency translation, net (33,787) (27,953) Other credits to income which do not represent cash flows (44,058) (52,816)

Changes in assets which affect cash flows: (Increase) decrease Trade receivables (10,761) (86,607) Inventory (3,549) 106,236 Other assets 10,483 (106,990)

Codelco Changes in liabilities which affect cash flows: Increase (decrease) 122 Accounts payable associated with operating results (16,853) 73,688 Interest payable 3,892 (11,952) Income tax payable, net 0 (3,115) Value added tax and other similar taxes payable, net 29,841 4,904

NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES 593,123 704,228 Simplified notes to the financial statements

As of December 31, 2002 and 2001

In management’s opinion the accompanying footnotes provide sufficient information in a less detailed format compared to the information contained in the footnotes to the financial statements which were presented to the Chilean Superintendency of Securities and Insurance which are filed for public use, This information may also be consulted with at the Company’s Offices.

Note 01 Description of business

Corporación Nacional del Cobre de Chile (“Codelco”, or the “Company”) is registered with the Securities Registry No. 785 of the Superintendency of Securities and Insurance. The Company is subject to the review of the Chilean Superintendency of Securities and Insurance.

The Company was formed as stipulated by Law Decree (D.L.) N°_1350 dated 1976. Codelco is a government owned 123 Annual Report 2002 mining, industrial and commercial company, which is a legal entity in itself and maintains its own equity. Codelco currently carries out its productive activities through its Chuquicamata, Radomiro Tomic, El Salvador, Andina, El Teniente and Talleres divisions. The Company also carries out similar activities in other mining deposits, directly or in association with third parties.

Codelco’s financial activities operate according to a budget system that is formed by an Operations Budget, an Investment Budget and a Loan Amortization Budget.

The Company’s tax regime is determined by Decree Law N° 1.350 and 2.398.

Note 02 Summary of Significant Accounting Policies

a) Accounting periods covered:

These individual financial statements cover the years ended December 31, 2002 and 2001.

b) Basis of preparation

The financial statements have been prepared in accordance with accounting principles generally accepted issued by the Chilean Association of Accountants, and regulations of the Chilean Superintendency of Securities and Insurance, except for investments maintained in subsidiaries, which are recorded at equity value in a single line of the Balance Sheet and, therefore, have not been consolidated on a line-by-line basis. This treatment does not modify net income for the year or equity. Should any discrepancy exist between the previously mentioned principles and regulations, the regulations of the Chilean Superintendency of Securities and Insurance will supersede the accounting principles generally accepted in Chile. These financial statements have been issued only for an individual analysis of the Company and, consequently, should be read together with the consolidated financial statements, which are required by generally accepted accounting principles in Chile.

c) Reporting currency:

In accordance with Article 26 of D.L. N° 1,350, the Company’s accounting is recorded in United States dollars.

d) Bases of conversion

The Company’s assets and liabilities in pesos, mainly composed of cash, accounts receivable, investments in companies in Chile, obligations and provisions, have been expressed in United States dollars at the observed exchange rate at each period closing date of Ch$ 718.61 per US dollar as of December 31, 2002 (2001: Ch$ 656.20 per US dollar).

The Company’s expenses and income in Chilean pesos have been expressed in US dollars at the observed exchange rate on the date that each transaction was recorded in the accounting records.

Codelco Foreign currency translation differences are charged or credited to income as applicable. 124

The average exchange rate for the period from January 1 to December 31, 2002 was Ch$689.24 per US dollar (2001: Ch$ 634.28 per US dollar).

Chilean subsidiaries

Assets and liabilities and income statement accounts in pesos as of December 31, 2002 and 2001 have been converted to US dollars at the exchange rates on those dates (2002: Ch$ 718.61 per US dollar; 2001: Ch$ 656.20 per US dollar).

Foreign subsidiaries

As of December 31, 2002 and 2001, the conversion of financial statements of foreign subsidiaries from their respective foreign currencies, have been converted to US dollars as of the end of the respective period, as follows:

2002 2001 US$ US$

British Pound Sterling 1.60436 1.45370 Euro 1.04723 - German marc - 0.45163 Mexican peso 0.09626 0.10931

e) Time deposits

Time deposits are recorded at investment value plus corresponding interest accrued at each year closing date. Simplified notes to the financial statements

As of December 31, 2002 and 2001 f) Inventories

Inventories are valued at cost, which does not exceed their net realization value. Cost has been determined using the following methods:

- Finished products and products in process

According to the absorption costing method finished products and products in progress are valued at average production cost. Production costs include depreciation of property, plant and equipment and overheads.

- Materials in warehouse

Materials in warehouse are valued at acquisition cost.

The Company determines an obsolescence provision considering the permanence in stock of materials in warehouse with slow turnover. 125 - Materials in transit Annual Report 2002

At cost incurred through year-end. g) Allowance for doubtful accounts

Management estimates the allowance for doubtful accounts based on its experience and analysis of the portfolio and of its aging. h) Property, plant and equipment

Property, plant and equipment are expressed in US dollars and valued at historical cost increased based on technical appraisals performed by The American Appraisal Co. and recorded during 1982 to 1984, net of accumulated depreciation.

Construction in progress includes the values invested in property, plant and equipment under construction and in mining development projects. i) Depreciation

Depreciation of property, plant and equipment is calculated using the straight-line method, the book values of property, plant and equipment, including the revaluation indicated in Note 2(h) above, and the estimated useful lives of the assets. j) Exploration, mine development and mine operating costs

When it is feasible that these expenses will generate revenues in the future, these expenses are recorded in income and amortized in the period in which revenue is generated. In the event that it is not clear whether they will generate revenues in the future, these expenses are recorded in income k) Investments in related companies

Investments in domestic and foreign related companies identified as permanent, are valued using the equity method in accordance with Technical Bulletins issued by the Chilean Association of Accountants. Chilean equity method investments, which are accounted for in Chilean pesos and are controlled in that currency, are expressed in US dollars at year-end. Valuation differences not arising from proportional recognition of accrued income, beginning on January 1, 2002 recognized in the Other reserves account within Equity. For the purposes of applying the equity method, investments in foreign subsidiaries are controlled in US dollars.

Unrealized gains related to investments in related companies are credited to income in relation to the amortization of the goods transferred or mine production, where applicable.

Investments in other companies are presented at acquisition cost adjusted for price-level restatement, which does not exceed market value.

l) Intangibles

Codelco

126 Intangibles are recorded at the value of the effective disbursements made and are amortized in accordance with Technical Bulletin N° 55 issued by the Chilean Association of Accountants.

m) Income tax and deferred income taxes

The Company provides for income taxes in accordance with current regulations, including the first category tax of 15% for 2001 and an additional 40% tax applied to state-owned entities as specified by Decree Law N° 2398. Law N° 19753 established a gradual increase in the first category tax rate to 16% for 2002, to 16.5% for 2003 and 17% for 2004 and thereafter.

The Company recognizes the effects of deferred income taxes arising from temporary differences, which have a different treatment for book and tax purposes, in accordance with the Technical Bulletins issued by the Chilean Association of Accountants and the regulations of the Chilean Superintendency of Securities and Insurance.

n) Staff severance indemnities

The Company has an agreement with its employees for payment of staff severance indemnities. It is Codelco’s policy to make a provision for the total accrued obligation at the undiscounted current cost.

o) Revenue recognition

Revenue is recognized at the time of shipment or delivery in conformity with contractual agreements and is subject to variations in contents and/or the sales price at the transaction settlement date. A provision is made for estimated decreases in sales values on unsettled operations at the end of the year based on the information available as of the date the financial statements are prepared. Simplified notes to the financial statements

As of December 31, 2002 and 2001 p) Futures contracts

The Company’s contracts in futures markets are entered into based on the following hedging policies:

- Hedging operations in metal futures markets are entered into in order to protect the Company from risks inherent to the fluctuation of the price of metals. This hedging policy has the purpose of protecting cash flows associated with sales operations and therefore these operations have been considered as hedging contracts for expected transactions. In accordance with the provisions of Technical Bulletin N° 57 issued by the Chilean Association of Accountants, the result of these hedging transactions is recorded at the date of settlement of the operations.

- Hedging policies for exchange rates and interest rates. Exchange rate hedges include exchange insurance contracts, which mitigate the risk of fluctuations between the UF and the US$ exchange rate and interest rate hedges include contracts at fixed interest rates for future obligations.

- The results of the forward foreign exchange contracts are recorded as of the date of maturity or settlement of the respective contracts, in conformity with Technical Bulletin N° 57 issued by the Chilean Association of Accountants. 127 - The results of the hedging contracts for fixing interest rates for future liabilities are amortized over the terms of those Annual Report 2002 liabilities.

Operations carried out in futures markets are not of a speculative nature. q) Computer software

Computer systems developed through the use of the Company’s own human resources and materials are charged to income in the period in which they are incurred.

In accordance with Circular N° 981 dated December 28, 1990 issued by the Superintendency of Securities and Insurance, computer systems acquired by the Company are capitalized at acquisition cost plus all associated costs, and are amortized over a period not exceeding four years. r) Research and development expenses

Research and development expenses are charged to income as incurred. s) Statement of cash flows

Cash and cash equivalents includes unrestricted cash and bank balances, time deposits and financial instruments, classified as short-term marketable securities, with maturity within 90 days, in accordance with Technical Bulletins issued by the Chilean Association of Accountants and the regulations of the Chilean Superintendency of Securities and Insurance. The Company considers all cash flows from operating, investing or financing activities as required by Technical Bulletins issued by the Chilean Association of Accountants and the regulations of the Chilean Superintendency of Securities and Insurance.

t) Bonds

Bonds are presented at the amount of capital owed plus accrued interest at each year-end.

u) Environmental exist costs

The Company has established a policy of accruing for future environmental exit costs, which mainly relate to the situation of tailing dams, which subsequent to the end of their useful lives, continue to generate expenses. This policy provides for the allocation of environmental exit costs over their exploitation stage.

v) Law N° 13196

Law N° 13196 requires the payment of a 10% contribution to the Chilean government on the export value of own copper Codelco and related by-products. 128

w) Cost of sales

The cost of sales includes direct and indirect costs and depreciation and amortization associated with the production process.

x) Cost of bond issuance

The total amount of the cost of bond issuance is recorded against income for the period, as established in Circular N° 1370 dated January 30, 1998 issued by the Superintendency of Securities and Insurance.

y) Reclassifications:

For comparative purposes with the financial statements of 2002, certain figures of 2001 have been reclassified. Simplified notes to the financial statements

As of December 31, 2002 and 2001

Note 03 Changes in Accounting Principles

In accordance with Technical Bulletin No. 64 issued by the Chilean Association of Accountants, beginning January 1, 2002, on investments in subsidiaries, foreign currency exchange differences arising from translation of the amounts of subsidiaries whose accounting records are maintained in Chilean pesos are recorded in equity accounts. Previously, such exchange differences were recognized in income. The effect of this change in accounting principle was the recognition in 2002 of a charge to Other reserves within Equity of ThUS$ 15,352 with its respective effect on income.

As of December 31, 2002, there were no other changes in accounting policy compared to the accounting principles used in the prior year. 129 Annual Report 2002 Note 04 Short-term and long-term receivables (Amounts in thousands of US$)

Current assets Long-term assets 2002 2001 2002 2001

Trade receivables 214,334 203,573 0 0 Estimate of uncollectible balances (2,282) (2,282) (0) (0) 212,052 201,291 0 0

Notes receivable 134 114 0 0

Other receivables 142,295 196,794 63,929 44,014 Estimate of uncollectible balances (14,038) (13,852) (0) (0) 128,257 182,942 63,929 44,014 Note 05 Transactions with Related Companies

The Company’s policies for transactions with related companies are specifically defined by the Company’s Board of Directors and regulated by the Company’s management.

The Company, acting in accordance with current regulations applicable and within the normal scope of its business, performs transactions with related entities or parties, under fair conditions, which are similar to those usually prevailing in the market at the time of their performance.

a) Notes and accounts receivable (in thousands of US$)

Accounts receivable from related companies are valued in United States dollars and are subject to interest rates which do not exceed market conditions.

The detail is as follows:

Codelco Short term Long term 130 Name of the company 2002 2001 2002 2001

Codelco International Ltd. 0 0 24,152 8,755 Codelco Küpferhandel GMBH 4,391 2,857 0 0 Chile Copper Limited 0 15,899 0 0 Minera Pecobre S.A. de C.V. 902 309 0 0 Codelco Group USA Inc. 94 0 0 0 Compañía Minera Picacho SCM 7 12 0 0 Isapre Chuquicamata Ltda. 0 933 0 0 Isapre San Lorenzo Ltda. 0 197 0 0 Isapre Río Blanco Ltda. 297 1,877 1,681 0 CMS Chile S.A. 0 4,891 5,589 0 Sociedad Contractual Minera El Abra 20,508 3,064 35,487 34,434 Electroandina S.A. 244 0 45,400 45,320 Inversiones Cobre Dos S.A. 0 9 0 0 Complejo Portuario Mejillones S.A. 47 86 0 0 Santiago de Río Grande S.A.C 0 2 0 0 Agua de La Falda S.A. 39 127 0 0 Cía. Contractual Minera Los Andes 43 0 0 0 CMS Tecnología S.A. 0 4,862 5,627 0

Total 26,572 35,125 117,936 88,509 Simplified notes to the financial statements

As of December 31, 2002 and 2001 b) Notes and accounts receivable (in thousands of US$)

Short term Long term Name of the company 2002 2001 2002 2001

Inst. Innovación en Minería y Metalurgia S.A. 1,486 1,290 0 0 Electroandina S.A. 11,891 3,238 0 0 Isapre San Lorenzo Ltda. 348 0 0 0 Isapre Chuquicamata Ltda. 517 0 0 0 Sociedad Contractual Minera El Abra 8,955 7,829 0 0 Ejecutora Hospital del Cobre Calama S.A. 0 210 0 0

Total 23,197 12,567 0 0 c) Composition of transactions (in thousands of US$)

The main transactions with related companies relate to commercial and financial operations. The former refer to the 131 purchase and sale of products and the latter refer mainly to loans in current accounts which are subject to restatements Annual Report 2002 and interest under the payment conditions agreed. The composition of amounts related to these transactions with subsidiaries (in thousands of US$) were as follows:

2002 2001 Amount Effect on Amount Effect on Company Nature of transaction income income

Electroandina S.A. Purchase of supplies 117,964 (117,964) 127,225 (127,225) Electroandina S.A. Interest 1,006 1,006 0 0 Sociedad Contractual Minera El Abra Purchase of products 170,224 (170,224) 139,187 (139,187) Sociedad Contractual Minera El Abra Sale of products 175,477 175,477 26,764 26,764 Sociedad Contractual Minera El Abra Loan and interests 1,052 1,052 34,434 0 Codelco Küpferhandel GMBH Sale of products 24,364 24,364 16,652 16,652 Chile Copper Limited Sale of products 1,082 1,082 16,422 16,422 Codelco USA Group Purchase of products 0 0 214 (214) Codelco USA Group Sale of products 363 363 0 0 Agua de La Falda S.A. Sale of services 345 345 641 641 Codelco International Limited Loan 15,398 0 5,519 0 Isapre Río Blanco Ltda. Purchase of services 4,921 (4,921) 4,262 (4,262) CMS Chile S.A. Loan 581 0 5,397 0 CMS Chile S.A. Purchase of services 1,386 (1,386) 264 (264) CMS Chile S.A. Sale of services 545 545 221 221 CMS Chile S.A. Purchase of equipment 22,574 0 18,841 0 Isapre San Lorenzo Ltda. Purchase of services 3,207 (3,207) 3,033 (3,033) Isapre San Lorenzo Ltda. Sale of services 228 228 190 190 Inst. Innovación en Minería y Metalurgia S.A. Purchase of services 4,784 (4,784) 5,043 (5,043) Inst. Innovación en Minería y Metalurgia S.A. Sale of services 229 229 291 291 Inst. Innovación en Minería y Metalurgia S.A Dividends received 352 0 0 0 Complejo Portuario Mejillones S.A. Loan 27 0 21 0 Note 06 Inventories

The breakdown of inventories as of December 31, 2002 and 2001 is as follows: (in thousands of US$):

2002 2001

Finished products 196,940 152,307 Work in progress 170,162 201,395 Materials in warehouse and others 111,589 121,440

Total 478,691 475,142

The value of inventories is presented net of the obsolescence provision for materials in warehouse of ThUS$30,644 and ThUS$25,866 as of December 31, 2002 and 2001, respectively.

Codelco 132 Note 07 Income and deferred income taxes

In accordance with Law N° 19753 and Technical Bulletin N° 71 issued by the Chilean Association of Accountants, the Company has recognized the effects of the increase in the first category income tax rate

This recognition resulted in 2001, a greater charge to income on income tax of ThUS$ 34,259. Deferred income taxes determined according to the criteria stated in Note 2 (m) represent a net total liability of ThUS$ 906,778 and ThUS$ 829,663 as of December 31, 2002 and 2001, which is detailed as follows:

a) Deferred taxes (in thousands of US$)

2002 2001 Asset Liability Asset Liability Accounts Short-term Long-term Short-term Long-term Short-term Long-term Short-term Long-term

Temporary differences Allowance for doubtful accounts 4,070 7,130 0 0 3,964 5,838 0 0 Vacations accrual 25,742 0 0 0 27,156 0 0 0 Depreciation of property, plant and equipment 0 0 92,831 1,099,494 0 0 45,685 1,096,434 Other events 7,207 30,533 828 4,854 12,642 16,331 42 168 Obsolescence 17,467 0 0 0 14,744 0 0 0 Contingencies 0 38,326 0 0 0 44,701 0 0 Environmental exit costs provision 0 40,885 0 0 0 32,598 0 0 Hedging of bonuses 0 0 5,951 27,457 0 0 2,330 11,265 Collective bargaining bonus 0 0 0 15,456 0 0 0 22,689 Unrealized gains 25,673 143,060 0 0 18,089 172,887 0 0

Total 80,159 259,934 99,610 1,147,261 76,595 272,355 48,057 1,130,556 Simplified notes to the financial statements

As of December 31, 2002 and 2001

b) Income taxes (in thousands of US$):

Item 2002 2001

Effects due to assets or liabilities for deferred tax for the year (77,115) (177,546) Other (charges) credits (3,793) 52,841

Total (80,908) (124,705)

Note 08 Property, plant and equipment

The composition of property, plant and equipment as of December 31, 2002 and 2001 is as follows (in thousand of US$): 133 Annual Report 2002 a) Property, plant and equipment 2002 2001

Land Land 25,510 25,743 Mining properties 158 44 Sub-total 25,668 25,787

Buildings and infrastructure Infrastructure 1,760,642 1,736,303 Buildings 1,834,714 1,830,015 Housing 128,573 135,818 Work-in progress 873,677 435,973 Development of mines and mining operations 1,125,958 1,018,677 Forestry and forest development 900 1,006 Sub-total 5,724,464 5,157,792

Machinery and equipment Machinery and equipment 4,677,701 4,626,620 Transportation equipment 593,370 542,036 Furniture and fixtures 26,872 33,725 Sub-total 5,297,943 5,202,381

Revaluation from fixed asset technical appraisal 417,794 435,802

Total gross property, plant and equipment 11,465,869 10,821,762 b) Depreciation 2002 2001

Buildings and infrastructure Infrastructure 1,413,037 1,271,119 Buildings 1,245,534 1,197,722 Housing 169,791 174,126 Development of mines and mining operations 492,890 407,502 Sub-total 3,321,252 3,050,469

Machinery and equipment Machinery and equipment 2,961,342 2,870,511 Transportation equipment 327,016 321,272 Furniture and fixtures 25,152 31,897 Sub-total 3,313,510 3,223,680

Total accumulated depreciation 6,634,762 6,274,149

Codelco c) Depreciation for the year 134 Buildings and infrastructure Infrastructure 66,387 63,462 Buildings 59,126 59,250 Housing 2,582 2,863 Development of mines and mining operations 97,121 84,697 Sub-total 225,216 210,272

Machinery and equipment Machinery and equipment 214,082 206,978 Transportation equipment 45,810 39,219 Furniture and fixtures 336 367 Sub-total 260,228 246,564

Total depreciation for the year 485,444 456,836 Simplified notes to the financial statements

As of December 31, 2002 and 2001

Note 09 Investments in related companies

The detail of investments in related companies as of December 31, 2002 and 2001 is as follows (in thousands of US$):

Number Ownership Accrued Unrealized Book value of Company of shares percentage result gaint (loss) the investment

2002 2001 2002 2001 2002 2001 2002 2001

Codelco Küpferhandel GMBH 0 100.00 100.00 775 2,299 0 0 20,189 16,375 Chile Copper Ltd. 0 100.00 100.00 129 43 0 0 1,718 1,431 Codelco Group USA Inc. 0 100.00 100.00 152 126 0 0 779 627 Codelco International Limited 12,000 99.99 0.00 (3,134) 0 0 0 0 0 Ejecutora Hospital del Cobre Calama S.A. 149,985 99.99 99.99 (220) 41 0 0 31 266 Instituto de Innovación en Minería y Metalurgia. S.A. 141,600 99.93 99.93 115 304 0 0 2,391 2,802 135 Agua de La Falda S. A. 17,052 49.00 49.00 (151) (1,715) 0 (1,860) 5,987 6,729 Annual Report 2002 Cía. Contractual Minera Los Andes 15,215,354 99.97 99.97 (8,372) (1,153) 0 (8,541) 0 300 CMS Chile S.A. 68,931 99.99 99.99 (3,642) (1,612) 0 0 0 0 Minera Pecobre S.A. de C.V. 481,794 49.00 49.00 (2,354) (2,475) 0 0 559 720 CMS Tecnología S.A. 175,000 17.50 17.50 (692) (290) 0 0 0 453 Electroandina S.A. 126,319,895 34.80 34.80 (529) (6,457) (57,503) (75,661) 41,133 29,620 Inversiones Min. Los Andes S.A. 0 0.00 48.98 0 0 0 0 0 0 Inversiones Tocopilla Ltda. 0 49.00 49.00 (5,677) (11,175) (20,684) (27,215) 105,786 91,172 Complejo Portuario Mejillones S.A. 13,306,358 99.90 99.90 (6) (624) 0 0 19,485 5,570 Santiago de Río Grande S.A.C. 4,999 99.98 99.98 0 0 0 0 7 8 Sociedad Contractual Minera El Abra 49,000 49.00 49.00 (38,995) (27,261) (217,714) (224,652) 52,431 84,488 Elaboradora de Cobre Chilena Ltda. 0 99.00 99.00 (815) (355) 0 0 0 567 Minera Yabricoya SCM 32,400 45.00 45.00 4 4 0 0 45 44 Asoc. Garantizadora de Pensiones 0 96.69 96.69 (39) 113 0 0 625 726 Compañía Minera Picacho SCM 10,000 100.00 100.00 (808) 12 0 0 88 962 Geotérmica del Norte S.A. 14,002,800 50.10 0.00 (1,565) 0 0 0 0 0 Isapre Chuquicamata Ltda. 0 98.30 98.30 28 1 0 0 1,619 1,668 Isapre San Lorenzo Ltda. 0 99.95 99.95 135 322 0 0 303 133 Isapre Rio Blanco Ltda. 0 99.90 99.90 71 248 0 0 471 424 Biosigma S.A. 1,000 66.67 0.00 (81) 0 0 0 907 0 Inversiones Enercobre S.A. 0 0.00 98.94 0 39 0 0 0 204 Inversiones Mejillones S.A. 18,671 34.80 0.00 (300) 0 0 0 22,180 0 Inversiones Cobre Dos S.A. 0 0.00 95.24 0 61 0 0 0 154

Total (295.901) (337.929) 276.734 245.443 In general, the Company’s foreign subsidiaries contribute to facilitate the commercial management of the Company in different foreign markets

The Company has not assumed any liabilities as hedging instruments to cover investments abroad.

A brief explanation of the main companies in which the Company has interests is detailed as follows:

Codelco Group Inc. (U.S.A.)

Codelco Group Inc. is a holding company which owns two operating companies, Codelco (U.S.A.) Inc. and Codelco Metals Inc.

Codelco (U.S.A.) Inc. is a sales agent for Codelco and administers sales contracts and settlements and coordinates product delivery for markets in the U.S.A., Canada and Mexico.

Codelco Metals Inc. conducts metal sales and purchase operations with Codelco and other companies, and covers the North American market.

Codelco 136 Codelco Küpferhandel GmbH (Germany)

Codelco Küpferhandel GmbH operates in the copper wire business, through the transformation of refined copper at an industrial plant in Emmerich, Germany, owned by Deutsche Giessdraht GmbH, which is 40% owned by Codelco Küpferhandel GmbH.

Codelco Küpferhandel Metall Agentur, a subsidiary of Codelco Küpferhandel GmbH, is a sales agent for Codelco and manages sales contracts and settlements and coordinates product delivery principally for markets in Germany, Austria, Holland and Denmark.

Chile Copper Limited (United Kingdom)

Chile Copper Limited is a sales agent for Codelco and manages sales contracts and settlements and coordinates product delivery for markets in England, Finland, Norway and Sweden.

Codelco Services Limited, a subsidiary of Chile Copper Limited, conducts metal sales and purchase operations with Codelco and other companies, covering principally the European market.

Codelco International Limited (Bermudas)

Codelco International Limited was formed in July 2001. The Company’s business objective is the management and control of interests of Codelco in different international projects. Through both this Company and its subsidiary, Codelco Technologies Limited, Codelco formalized joint investments with Billiton in Alliance Copper Limited for the use of modern technology in mining operations. In addition, Codelco made investments through Codelco International Limited in Quadrem International Holdings Limited, a global company comprised of 18 of the most significant mining companies in the World to operate in an electronic market where companies may buy and sell goods and services. Simplified notes to the financial statements

As of December 31, 2002 and 2001

Codelco International Limited and Codelco Technologies Limited formed Codelco Do Brasil Mineracao Limitada, located in Brazil, with the objective of developing projects for exploration and exploitation, business and market development activities.

Instituto de Innovación en Minería y Metalurgia S.A.

Instituto de Innovación en Minería y Metalurgia S.A. is a closely-held shareholders’ company which performs activities in connection with research, development and technological innovation in the areas of mining and metallurgy.

Complejo Portuario Mejillones S.A.

Complejo Portuario Mejillones S.A. manages studies and development activities in connection with a port project in Mejillones, Region II of Chile, whose activities commenced in January 2002.

Instuitución de Salud Previsional Chuquicamata Limitada

Isapre Chuquicamata Limitada, is a civil limited liability company whose objective is the provision of healthcare services 137 and benefits to their members. Annual Report 2002

Geotérmica del Norte S.A.

Geotérmica del Norte S.A. is a closed shareholders’ company whose business objective is the exploration and exploitation of geothermal deposits located between the Regions I, II and III of Chile and the sale, using whatever means necessary, of all products and by-products derived directly or indirectly by the performance of the aforementioned activities.

Agua de la Falda S.A.

In 1996, Agua de la Falda S.A. was formed by Codelco (49%) and Minera Homestake (51%).

The company's business objective is the exploration and exploitation of gold and other ore deposits in Region III of Chile.

Compañía Contractual Minera Los Andes

Compañía Contractual Minera Los Andes was formed in 1996 through contributions made by Codelco, AMP Chile Holding Ltda, and Australian Mutual Provident Society for the exploitation and development of Exploradora, Sierra Jardín, María Delia and Sierra Morena prospects located in Regions I, II and III of Chile.

The business through both Compañía Contractual Minera Los Andes and Inversiones Minera Los Andes S.A. did not generate the results expected and therefore Codelco and AMP Holdings Chile Ltda. opted to terminate their association.

As a result, the Company’s Board of Directors provided powers to the Chief Executive Officer to perform the activities required to agree with AMP Holdings Chile Ltda. the conditions for the termination of the previously mentioned association for which each partner would maintain the control of the company whose business is better related to the nature of its own business activities. Under these conditions, during December 2001, Codelco assumed the majority control of Sociedad Contractual Minera Los Andes S.A. due to its ownership maintained in Inversiones Minera Los Andes S.A. Minera Pecobre S.A. de C.V.

Minera Pecobre S.A. de C.V. is a Mexican company with variable capital formed by the Mexican company Minas Peñoles S.A. de C.V. and Codelco, with share holdings of 51% and 49%, respectively.

The company’s line of business is the exploration of copper and by-products in mining lot concessions in the state of Sonora, Mexico. Through other mining companies, the company also explores, processes and disposes of ore found in the mining lots.

Inversiones Tocopilla Ltda. and Electroandina S.A.

Inversiones Tocopilla Ltda. is a holding company in which Inversora Eléctrica Andina S.A. (a consortium of Powerfin S.A. of Belgium, Iberdrola S.A. of Spain and Enagas S.A. of Chile) has a 51% interest and in which Codelco holds 49%.

The principal business of Electroandina S.A. is the generation, transmission and distribution of electric energy in Region II of Chile. Inversiones Tocopilla Ltda. holds 65.2% and Codelco holds 34.8%. The main assets of Electroandina S.A. were acquired from the Company’s former Tocopilla Division Codelco 138 Sociedad Contractual Minera El Abra

Sociedad Contractual Minera El Abra was formed in 1994 by Codelco-Chile (49%) and Cyprus El Abra Company (51%), with Cyprus Amax Minerals Company guarantor, to develop and exploit the El Abra deposit.

Codelco’s investment in the project consisted of the contribution of a number of mining properties. The financing agreements for the project became effective September 15, 1995 and include the following obligations during the term of the agreements:

a)A long-term trading agreement with Codelco Services Ltd. for a portion of the production of El Abra. b) The commitment from the partners to maintain majority ownership of the property of Sociedad Contractual Minera El Abra. c) A pledge on the shares of Sociedad Contractual Minera El Abra in favor of the institutions which granted the loans.

Biosigma S.A.

Biosigma S.A. is a closely-held shareholders’ company which was formed by Codelco-Chile and Nippon Mining & Metals Co. Ltd. through contributions of 66.67% and 33.33% of the company’s capital, respectively.

Biosigma S.A. was formed on May 31, 2002 and its business objective is the commercial development of geomics, proteomics and bioinformatics processes and technology for mining purposes.

nversiones Mejillones S.A.

Inversiones Mejillones S.A. was formed as a Company on March 20, 2002, with a direct ownership by 34.8% of Codelco Chile and 65.2% of Inversiones Tocopilla Ltda. Codelco has an ownership in the capital of Inversiones Tocopilla Ltda. by 49%. Simplified notes to the financial statements

As of December 31, 2002 and 2001

Inversiones Mejillones S.A., was formed with the objectives to acquire 82.34% of the shares of Empresa Eléctrica del Norte S.A. (Edelnor), reschedule its financial liabilities and coordinate the operations of Electroandina (of which Codelco and Inversiones Tocopilla are partners) and Edelnor.

Additionally, the Company has recorded unrealized gains related to the contribution of mining properties, property, plant and equipment and company rights.

The most important transactions are detailed as follows:

- Sociedad Contractual Minera El Abra The Company contributed mining properties to Sociedad Contractual Minera El Abra in 1994, which at December 31, 2002 generated a deferred gain in the amount of ThUS$6,937 (ThUS$ 24,033 in 2001.)

- Electroandina S.A. Generated in 1996, which corresponds to the negative goodwill for the contribution in fixed assets, the realizable gain is expected to be realized in ten years up to 2006. During 2002, gains for an amount of ThUS$18,159 (ThUS$18,159 in

2001) were recognized 139 Annual Report 2002

- Inversiones Tocopilla Ltda. Generated in 1996, which corresponds to the negative goodwill related to the initial contribution of social rights, the gain is expected to be realized in ten years up to 2006. During 2002, gains for an amount of ThUS$6,531 (2001, ThUS$6,531) were recognized.

Note 10 Other Assets

Other assets as of December 31, 2002 and 2001 are as follows: (in thousands of US$):

2002 2001

Initial filling of plant (1) 16,263 11,312 Nueva Calama integration project 74,037 34,675 Interest rate hedging (2) 58,610 26,698 Deferred expenses of collective negotiation (3) 27,116 41,559 Complementary activities (4) 30,981 4,828 Hedging for issuance of bonuses (5) 9,529 0 Other 244 253

Total 216,780 119,325 (1) Corresponds mainly to expenses for initial filling of the Radomiro Tomic Division Leaching Plant, which are amortized in five years starting in 2000.

(2) Corresponds to variations occurred in hedging operations and interest rate related to publicly debt obligations, which are amortized using the straight-line method over the maturity term of the respective obligations up to September 2008.

(3) Corresponds to the bonus for completion of the collective negotiation, which is amortized over the term of each collective bargaining agreement.

(4) Corresponds to disbursements related to improvements of tailing dams and hydro and geological activities, which are amortized over a maximum period of 6 years, depending on the related activity.

(5) Corresponds to disbursements related to the issuance of bonuses in Chile and its conversion from UF to US$. These are amortized using the straight-line method until the maturity date of these bonuses (2012).

Codelco 140 Note 11 Short-term debt due to banks and financial institutions

Although the Company is authorized to maintain its accounting in US dollars for the purpose of this Note those obligations maintained in US dollars have been considered to be balances maintained in foreign currency (in thousands of U,S, dollars):

- Short-term

US$ Bank or financial institution 2002 2001

San Paolo IMI SpA 25,116 35,497 Santander Central Hispano 0 60,738 Standard Chartered Bank 0 40,510 Banco Bilbao Vizcaya 0 30,102 The Bank of Tokio-Mitsubishi 35,117 0 The Royal Bank of Canada 50,526 0 Toronto Dominion Bank 35,000 0 Banco de Chile 30,069 0 ABN AMRO Bank (Chile) 30,189 0 Total 206,017 166,847 Principal owed 205,174 165,266 Annual average interest rate 1.99 3.07 Obligations in foreign currency (%) 100.00 100.00 Simplified notes to the financial statements

As of December 31, 2002 and 2001

- Current portion of long-term

US$ Bank or financial institution 2002 2001

JP Morgan - The Chase Manhattan Bank 276,806 152,243 Total 276,806 152,243 Principal owed 275,000 150,000 Annual average interest rate 1.70 2.90 Obligations in foreign currency (%) 100.00 100.00

Note 12 Long-term debt due to banks and financial institutions 141 Annual Report 2002 These obligations as of December 31, 2002 and 2001, accrue interest at different rates based on Libor.

Although the Company is authorized to maintain its accounting in US dollars for the purpose of this Note those obligations maintained in US dollars have been considered to be balances maintained in foreign currency.

Yeras to maturity Total long-term at the date of Annual average After 1 years After 2 years close of finacial statements Bank or financial institution interest rate % but within 2 years but within 3 years 2002 2001

JP Morgan-The Chase Manhattan Bank 1.70 300,000 0 300,000 875,000 Citibank N.A. 1.88 0 300,000 300,000 0 Total 300,000 300,000 600,000 875,000 Percentage of obligations in foreign currency (%) 100.00 100.00 Note 13 Short and long-term bonds payable

On May 4, 1999, the Company issued and placed bonds in the North American market, under Regulation 144-A, for a nominal amount of ThUS$ 300,000. These bonds mature in a single installment on May 1, 2009, with an interest rate of 7.375% per annum with interest paid semi-annually. As of December 31, 2002 and 2001 the Company presents in current liabilities a balance amounting to ThUS$ 3,667 which corresponds to the interest of each year.

On November 18, 2002, the Company issued and placed bonds in the domestic market, under the regulations of the Superintendency of Securities and Insurance. This bond was issued by a nominative amount of UF 7,000,000, (equivalent to ThUS$ 162,643) of a single series denominated A Series, and is comprised by 70,000 titles of UF 100 each. These bonds mature in a single installment on September 1, 2012, with an interest rate of 4.0% per annum with interest paid semi-annually. As of December 31, 2002, the Company presents in current liabilities a balance of ThUS$ 2,212, which corresponds to the interest.

On November 30, 2002, the Company issued and placed bonds in the North American market, under Regulation 144- A, for a nominal amount of ThUS$ 435,000. These bonds mature in a single installment on November 30, 2012, with an Codelco interest rate of 6.375% per annum with interest paid semi-annually. As of December 31, 2002, the Company presents 142 in current liabilities a balance of ThUS$ 2,374, which corresponds to the interest.

Note 14 Provisions and write-offs

The composition of Current and Long-term Provisions (in thousands of Chilean pesos) as of December 31, 2002 and 2001, is as follows:

Short-term Long-term Item 2002 2001 2002 2001

Hedging of interest rate 195 2,517 0 0 Freight-out and handling (1) 2,674 3,277 0 0 Customs, freight-in and related costs (2) 24,142 18,242 0 0 Employee pension plan 1,875 895 31,475 28,652 Staff severance indemnities 24,458 26,480 363,456 370,594 Export tax (Law 13196) 26,249 10,153 0 0 Payroll (3) 25,581 30,060 0 0 Vacations 45,161 47,642 0 0 Miscellaneous 20,758 25,697 120 256 Environmental exit costs (4) 0 0 71,728 57,190 Contingencies 0 0 67,239 78,422 Provision for investments in related companies 0 0 20,353 1,716

Total 171,093 164,963 554,371 536,830 Simplified notes to the financial statements

As of December 31, 2002 and 2001

(1) Corresponds to provision related to sales, including freight expenses, loading, and unloading not invoiced as of the end of the period.

(2) Corresponds to provision for customs duties, acquisition freight charges, and electricity, among others.

(3) Corresponds to benefits granted to the Company’s employees which are accrued as of the date of close of these financial statements, among which Christmas and Independence day bonuses, other bonuses, legal employee bonus and other benefits are included.

Note 15 Staff severance indemnities

The movement in the provision for staff severance indemnities is summarized as follows as of December 31, 2002 and 2001 (in thousands of US$): 143 Current liabilities Long-term liabilities Annual Report 2002 Movements 2002 2001 2002 2001

Balance as of January 1 26,480 30,537 370,594 391,095 Payments made (13,819) (15,081) 0 0 Provision for the year (including effects for variations in exchange rates) 0 0 4,659 (9,477) Transfer to short-term 11,797 11,024 (11,797) (11,024)

Total 24,458 26,480 363,456 370,594 Note 16 Changes in Shareholders’ Equity

The Company was formed by Law Decree No. 1350 dated 1976, which establishes that all net income generated by the Company goes to the benefit of the Chilean Government after deducting amounts that, with a charge to net earnings for each year, must be maintained in Other Reserves as established in Article Six of Decree Law N° 1350, dated 1976, as well as included in proposal made by the Board of Directors to the Ministry of Mining and the Ministry of Finance.

The composition of Other reserves as of December 31, 2002 is as follows (in thousands of US$):

Detail Year Accumulated

Capitalization of net income 25,574 592,703 (Exempt Decree Ministry of Mining and Treasury Department)

Cumulative translation adjustment – subsidiaries (1) (15,352) (15,352)

Residential programs 0 35,100

Codelco 144 Asset revaluation reserve Decree Law N°3648 0 624,568

Balance of Other Reserves as of December 31, 2002 10,222 1,237,019

(1) The composition of the cumulative translation adjustment recorded in the Other Reserves corresponds to the investments in subsidiaries whose currency is other than United States dollar, is as follows (in thousands of US$):

Hospital del Cobre S. A. 15 Instituto de Innovación en Minería y Metalurgia S.A. 132 Compañía Contractual Minera Los Andes 514 CMS Chile S.A. 704 CMS Tecnología S.A. 126 Electroandina S.A. 6,116 Inversiones Tocopilla Ltda. 6,675 Complejo Portuario Mejillones S.A. 853 Santiago de Río Grande S.A.C. 1 Elaboradora de Cobre Chilena Ltda. 182 Yabricoya SCM 3 Asociación Garantizadora de Pensiones 62 Isapre Chuquicamata Ltda. 77 Isapre San Lorenzo Ltda. (36) Isapre Rio Blanco Ltda. 25 Compañía Minera Picacho SCM 66 Geotérmica del Norte S.A. 42 Biosigma S.A. 13 Inversiones Mejillones S.A. (218 )

Total 15,352 Simplified notes to the financial statements

As of December 31, 2002 and 2001

Movements in shareholders’ equity during 2002 and 2001 are detailed as follows (in thousands of US$):

2002 2001

Paid-in Others Provisional Net income Paid-in Others Provisional Net income Movements capital reserves dividends for the year capital reserves dividends for the year

Beginning balance 1,524,423 1,226,797 (76,853) 25,574 1,524,423 1,215,885 (168,919) 205,387 Distribution of prior year income 0 0 0 0 0 0 168,919 (168,919) Final dividend of prior year 0 0 0 0 0 0 0 (25,556) Capitalization of reserves and /or revenues 0 25,574 0 (25,574) 0 10,912 0 (10,912) Net changes in equity in subsidiaries and affiliated companies 0 (15,352) 0 0 0 0 0 0 Net income for the year 0 0 0 48,476 0 0 0 25,574 Provisional dividends for fiscal benefit 0 0 0 0 0 0 (76,853) 0 Total 1,524,423 1,237,019 (76,853) 48,476 1,524,423 1,226,797 (76,853) 25,574 145 The amount of ThU$76,853, presented in the chart above corresponds to surplus advances to the Chilean Treasury, Annual Report 2002

Note 17 Other non-operating income and expenses

As of December 31, 2002 and 2001, other non-operating income and expenses are detailed as follows (in thousands of US$):

a) Other non-operating income

Item 2002 2001

Forward contracts 2,539 247 Fines to suppliers 3,452 2,343 Calama plan 0 3,230 Miscellaneous 37,153 43,915 Sale of bases 64 80 Miscellaneous sales 5,031 7,050 Sales of services 7,925 8,080 Sales of fixed assets 2,330 1,005 Recovery of future operations 732 8,000 Realized gain in contributions to companies 43,625 52,816 Rents 1,928 2,120 Insurance recoveries 1,355 700

Total 106,134 129,586 b) Other non-operating expenses

Item 2002 2001

Export tax (Law N° 13196) 240,071 260,070 Pre-investment expenses 41,789 25,833 Updating of severance indemnities 20,783 24,758 Contingency provision 12,000 12,220 Retirement plans 11,478 11,828 Other personnel expenses 7,679 10,888 Vacation accrual 7,050 9,171 Cost of sales in services 4,087 2,803 Cost of rents 462 180 Costs of miscellaneous sales 5,156 5,906 Environmental exit costs 19,080 8,523 Amortization of collective bargaining bonus 18,587 8,293 Other expenses 13,535 8,964 Codelco Write-offs of obsolete property 6,214 3,010 146 Losses on impairment of fixed assets 13,686 2,599 Currency hedging 1,021 1,551 Labor related sicknesses 933 1,085 External bonuses expenses 7,791 0 Domestic bonuses expenses 3,098 0 Former Tocopilla Division expenses 967 704 Value added tax not recovered 1,495 601 Inventory of materials 1,157 466 Mining licenses 228 231

Total 438,347 399,684 Simplified notes to the financial statements

As of December 31, 2002 and 2001

Note 18 Foreign currency translation

The (charge) credit to income for foreign currency translation as of December 31, 2002 and 2001 is as follows (in thousands of US$):

ASSETS (CHARGES) / CREDITS Currency 2002 2001

Cash Ch $ (3,124) 1,979 Other receivables Ch $ 790 1,041 Trade receivables British Sterling Pounds 0 (46) Trade receivables Ch $ 1,367 0 Trade receivables Euros 0 (58) Other current assets Ch $ (7,140) (11,042) Investments in related companies Ch $ 2,834 (29,306) Long-term receivables Ch $ (1,274) (2,970) Other Ch $ (3,271) (6,562) 147 Annual Report 2002 Total (Charges) Credits (9,818) (46,964)

LIABILITIES (CHARGES) / CREDITS

Accounts payable Ch $ 8,253 13,848 Other payables Ch $ (489) (697) Other provisions Ch $ 0 6,271 Other current liabilities Ch $ (651) (19) Other long-term liabilities Ch $ 36,492 55,514

Total (Charges) Credits 43,605 74,917

Total 33,787 27,953

Note 19 Expenses of issuance and placement of shares and debt titles

Expenses incurred in the issuance and placement of bonds performed in 2002, as detailed in Note 13, were recorded against net income of 2002 Note 20 Statement of Cash Flows

The detail of “Other” included in the statements of cash flows is as follows (in thousands of US$):

2002 2001

Other income received: Recovery of V.A.T 320,620 299,945 Other 51,242 87,237 Total 371,862 387,182

Other expenses paid: Contribution to the Chilean Treasury Law N° 13.196 222,741 256,708 Financial coverage 50,642 4,747 Total 273,383 261,455

Other investing income: Codelco 148 Recovery of loans granted to employees 29,329 29,756 Total 29,329 29,756

Other investment disbursements : Loans granted to employees 24,967 60,708 Cost of transferring the mining camp 39,363 36,675 Cost of complementary operations 10,361 0 Negotiation bonus employees of Chuquicamata division 0 49,852 Community development 9,630 0 Other disbursements 1,419 0 Total 85,740 147,235 Simplified notes to the financial statements

As of December 31, 2002 and 2001

Note 21 Derivative contracts

The Company maintains contracts in place for operations of fixing prices. These contracts total FMT 279 of copper from which at year-end FMT 174 are protected and expire in June 2004.

In addition, the Company has protecting operations against variations in exchange rates which total ThUS$ 216,074, from which ThUS$ 51,592 expire in September 2003 and ThUS$ 164,482 expire in November 2012.

Likewise, as of December 31, 2002, the Company has contracts in place to fix the interest rates of debt obligations with banks and financial institutions. Payments made of these contracts amounted to deferred costs of ThUS$ 58,610 (ThUS$ 26,698 in 2001) which are amortized over the maturity term of the respective obligations from January 2003 and September 2008.

Note 22 Contingencies and restrictions 149 Annual Report 2002 Codelco is involved in various pending legal actions initiated by or against the Company which, are derived from the inherent nature of the industry in which the Company operates. In general, these lawsuits are generated by civil, tax, legal and mining actions, all of which are related to the Company’s operating activities.

In the Company’s management’s and legal advisors’ opinion, these lawsuits do not represent loss contingencies for significant amounts. In addition, with respect to all these lawsuits, the Company defends its rights and uses all instances and legal and proceeding resources available.

The Company maintains no restrictions or covenants associated with obligations with banks and financial institutions or with the public.

The Company has obligations with the Chilean Treasury, generated by the regulations of Law Nº 18.634 on deferred custom duties for an amount of ThUS$ 134,312 (ThUS$ 141,358 in 2001). Note 23 Sureties obtained from third parties

As of December 31, 2002 and 2001, the Company has received a number of guarantees that mainly cover obligations of suppliers and contractors related to various projects under development. Considering the large number of guarantees received as of December 31, 2002 and 2001 and the many suppliers and contractors involved, the amounts covered are presented by Division as follows (in thousands of US$):

Division 2002 2001

Chuquicamata 46,439 16,480 Radomiro Tomic 85,651 135,943 Salvador 25,442 30,190 Andina 5,182 5,925 El Teniente 70,677 51,123 Main Office 51,318 55,684

Codelco Total 284,709 295,345 150

Note 24 Assets and liabilities in National and Foreign Currencies

As of December 31, 2002 and 2001, foreign currency denominated assets and liabilities are as follows (in thousands of US$):

Total assets Total liabilities Short term Long term Moneda 2002 2001 2002 2001 2002 2001

Ch$ 475,325 384,956 242,968 169,480 398,421 366,998 U.S. dollar 6,175,742 5,689,183 760,421 652,540 2,546,606 2,210,258 Euro 23,226 3,915 0 0 0 0 British Sterling Pound 6,973 4,068 0 0 0 0 Mexican peso 215 720 0 0 0 0 German marc 0 16,375 0 0 0 0 Simplified notes to the financial statements

As of December 31, 2002 and 2001

Note 25 Sanctions

Codelco Chile, its Directors and Management have not been subject to sanctions applied by the Superintendency of Securities and Insurance or other administrative authorities.

Note 26 Subsequent events

The Company’s management has no knowledge of significant events of a financial nature or any other nature, occurring between December 31, 2002 and the date of issuance of these financial statements (February 28, 2003) which may affect them.

Note 27 Environment 151 Annual Report 2002 The practice of exploration and recognition of new resources, which were environmentally sustainable, has been a significant concern for the Company. Consequently, since 1998 the Company defined its environmental commitments, which are controlled through an environmental management system for explorations that has been improved in time to conform to the worldwide standard ISO 14001, which has helped the works related to geology, geochemical, geophysical and welding focused on exploration of mineral resources both in Chile and abroad.

Under these circumstances, the Radomiro Tomic Division received ISO 14001 certification. The Company expects to obtain ISO 14001 certification for its other divisions during the first half of 2003.

In conformity with this policy, in 2002 the Company has performed investments amounting to ThUS$ 93,066 (ThUS$ 49,841 in 2001) which are identifiable with environmental issues.

Juan Villarzú Rohde Francisco Tomic Errázuriz Patricio Mac-Niven Silva Mario Allende Gallardo Chief Executive Officer Corporate Vice President of Corporate Manager of Accounting Manager Human Development and Finance Shared Services Reasoned analysis of the individual financial statements

The purpose of the following section is to alalyse and to explain the main variations occurred in the Individual Financial Statements of the Corporación Nacional del Cobre de Chile during the exercise that took place between December 2001 and December 2002. In what follows a summary of the information in such statements is shown.

All figures are expressed in thousands of United States dollars.

Summary of the financial indicators of the Society.

General Statement 31.12.2001 31.12.2002 Variation Ratio Ratio %

Liquidity Current assets/current liabilities (times) 1.28 1.17 (8.59) (Current assets-Inventories-Prepaid expenses)/Current liabilities (times) 0.69 0.68 (1.45)

Debt Total liabilities/Equity (times) 1.26 1.44 14.29 Current liabilities/Total liabilities (times) 0.24 0.25 4.17 Long-term liabilities/Total liabilities (times) 0.76 0.75 (1.32) Coverage ratio (times) 0.01 0.01 0.00 Codelco 152 Activity Rotation of accounts receivable (times) 16.23 14.72 (9.30) Recovery of bills (days) 22.18 24.46 10.28 Rotation of inventories (time) 5.47 5.05 (7.68) Permanence of inventories (days) 66 71 7.58

MUS$ MUS$ % Total liability 3,399,276 3,948,416 16.15

The net active assets increased in ThUS$ 639,279 (year 2001 ThUS$ 462,349), not taking into account depreciation. Among the main increases. Mine Development ThUS$ 5,284 (2001, ThUS$ 7,083), Mining Operations ThUS$ 99,019 (2001, ThUS$ 128,875), the remaining corresponds to constructions and works of infrastructure and other items of fixed assets.

Results 31.12.2001 31.12.2002 Variación MUS$ MUS$ %

Operational income 3,267,214 3,121,022 (4.47) Operational costs (2,600,765) (2,416,764) (7.07) Operational results 528,784 560,676 6.03 Financial expenses (99,209) (76,152) (23.24) Non-operational result (378,505) (431,292) 13.95 R.A.I.I.D.A.I.E. (1) 706,324 690,980 (2.17) Income after taxes 25,574 48,476 89.55 FMT FMT % Volume physical sales (own and of third parties) 1,989,234 1,817,302 (8,64) not including trading operations

Equity 31.12.2001 31.12.2002 Variation MUS$ MUS$ %

Equity 2,699,941 2,733,065 1.23 Fixed net assets 4,547,613 4,831,107 6.23 Total assets 6,099,217 6,681,481 9.55

Profitability 31.12.2001 31.12.2002 Variation Ratio Ratio %

Of the assets (%) 0.42 0.73 73.81 Of the equity (%) 0.95 1.77 86.32 Performance operational assets (2) 0.44 0.76 72.73

Income/Loss due to USD action Not applicable Not applicable Not applicable 153 (1) R.A.I.I.D.A.I.E.: Results before taxes, interests, depreciation, amortization and extraordinary items. Annual Report 2002 (2) Operational assets are the total assets minus the investment in other societies and related societies.

Analysis of the Market Variations During 2002, the markets in which the Corporation commercializes its products have not undergone major changes.

Analysis of the General Statement As of December 31st 2002, the current liquidity index shows a decrease compared to the previous exercise, due to the maturation of long term liability of Codelco which installments are due in 2003 and amounting to ThUS$ 275,000 (2001, ThUS$ 150,000) reclassification which was not compensated by the increase of ThUS$ 144,722 of current assets.

In the 2002 exercise, the current assets increased to ThUS$ 1,172,185 (2001, ThUS$ 1,051,144) composed mainly by term deposits for ThUS$ 138,088, sale debtors for ThUS$ 212,052, various debtors for ThUS$ 128,257, inventories for ThUS$ 478,691 and the difference is composed by other accounts of the current assets.

The fixed net asset as of December 31st 2002 was of ThUS$ 4,831,107 (2001, ThUS$ 4,547,613) composed mainly by constructions and works of infrastructure for ThUS$ 5,724,464, machinery and equipment for ThUS$ 5,297,943, accumulated depreciation for ThUS$ 6,634,762; other accounts of this item explain the difference.

As of December 31st 2002, the other assets amounted to ThUS$ 678,189 (2001, ThUS$ 500,460) composed by investment in related companies, for ThUS$ 276,734, long term debtors ThUS$ 63,929, documents and bills to be paid related companies ThUS$ 117,936 and other various accounts.

As of December 31st 2002 the current liability amounts to ThUS$ 1,003,389 (2001, ThUS$ 822,020) and it is composed of bank debts for ThUS$ 482,823, accounts payable for ThUS$ 230,776; other accounts make up the difference. As of December 31st 2002, the long term liability reached ThUS$ 2,945,027 (2001, ThUS$ 2,577,256) composed by bank and public debts for ThUS$ 1,497,643, various provisions for ThUS$ 554,371 and deferred taxes for ThUS$ 887,372.

These figures determine the ratios and indicators shown in the previous pages.

As of December 31st 2002, the equity amounts to ThUS$ 2,733,065 (2001, ThUS$ 2,699,941). This 2002 equity includes ThUS$ 15,352, corresponding to exchange differences for conversion of related socities.

As of December 31st 2002, the total debt of the Corporation amounts to ThUS$ 3,948,416 (2001, ThUS$ 3,399,276); this determines a debt ratio for 2002 of 1.44 times (2001, 1.26 times).

Analysis of the Results During the 2002 exercise, the price of copper in the London Metal Exchange was quoted at an average of US$ 0.706 (2001, US$ 0.716) per pound.

The exploitation result of the 2002 exercise reached an income of ThUS$ 560,676, compared to ThUS$ 528,784 in 2001. The variation is the consequence of the combined effect of a decrease in the exploitation costs in ThUS$ 184,001 and Codelco

154 in the exploitation income in ThUS$ 146,192.

The decreased exploitation income is accounted for by a decrease of the income from copper sales in ThUS$ 194,994; the difference correspondos to sales of subproducts. The drop in copper sales is due to a lower amount shipped by FMT 171,934 compared to 2001 (1,989,234 FMT) with an effect of ThUS$ 257,838 lower income, and to a better price of US$ 0.6969 compared to 2001 (US$ 0.6811), which positively affected income in ThUS$ 70,423.

As a consequence of the variation experienced during the exercise, the following situations affected the exploitation results.

The total exploitation income reached ThUS$ 3,121,022, of which ThUS$ 2,791,985 correspond to copper and the difference to subproducts and others.

Regarding the sales of Codelco´s own copper, these reached 1,487,111 FMT.

The exploitation costs, which include the cost of copper and subproducts were of ThUS$ 2,416,764.

The results of the exploitation generated a net expense of ThUS$ 431,292.

These expenses, other than the exploitation which amounted to ThUS$ 438,347, include ThUS$ 240,071 corresponding to tax Law Nº 13,196, which taxes in 10% the income on exports.

The profits of Codelco (results before income tax, extraordinary items, minority interest and Law Nº 13,196) reached ThUS$ 369,455, lower than the ThUS$ 410,349 of 2001.

As a consequence the liquid profits were of ThUS$ 48,476 and the results before income taxes and extraordinary items were of ThUS$ 129,384. Analysis of the Statement of Cash Flows The net flow originated by the operation activities for the exercise ended on December 31st 2002 produced a positive flow of ThUS$ 593,123, 15.77% lower than the ThUS$ 704,228 of 2001.

This variation is accounted for by the decrease in collections of debtors for sales, compensated by a decrease in payments to suppliers and others for ThUS$ 70,628 compared to 2001.

On the other hand, the financing activities generated a positive flow of ThUS$ 487,643 compared to the positive flow of ThUS$ 8,810 of the 2001 exercise. This is mainly due to the credit amortization in both years, the contribution to the Treasury in 2001 for ThUS$ 102,409 and higher loans obtained in 2002 for ThUS$ 550,000 compared to 2001, adding also the financing obtained through the placement of bonds both in the local (ThUS$ 162,643) and foreign markets (ThUS$ 435,000).

Finally, the investment activities generated a negative flow of ThUS$ 963,552 in 2002 and of ThUS$ 728,928 in 2001, corresponding in both exercises mainly to additions of Fixed Assets, Mine Developments and Mining Operations, which are included in the budgets of the Corporation. 155 Annual Report 2002 Considering the previously mentioned flows, plus the initial balances, an effective balance of ThUS$ 143,937 was obtained for 2002, compared with ThUS$ 26,723 for 2001.

Statements of Income by Divisions Report of Independent Accountants Santiago, Chile, December 31, 2002 and 2001

To the Chairman and Directors of Corporación Nacional del Cobre de Chile

We have audited the statements of income by divisions of Corporación Nacional del Cobre de Chile for the years ended December 31, 2002 and 2001. These statements of income are the responsibility of the management of Corporación Nacional del Cobre de Chile. Our responsibility is to express an opinion on these statements of income based on our audits.

On this same date, we have issued an unqualified opinion on the consolidated financial statements of Corporación Nacional del Cobre de Chile for the years ended December 31, 2002 and 2001. Additionally, on February 28, 2003 and January 30, 2002, respectively, we issued our opinion on the allocation to the operating divisions of head office and subsidiaries income and expenses for the years ended December 31, 2002 and 2001, in accordance with the basis established by the Company. The accompanying statements of income by divisions have been prepared in compliance with the Company’s statutory obligations on the basis of accounting policies discussed in the accompanying Notes 1 and 2, and they have 157 been subject to the same audit procedures as were applied to the Company’s financial statements. Annual Report 2002

In our opinion, the statements of income by divisions referred to above present fairly, in all material respects, the results of the operations of the divisions of Corporación Nacional del Cobre de Chile for the years ended December 31, 2002 and 2001, in conformity with generally accepted accounting principles in Chile and the basis of preparation described in the notes to these statements of income by divisions.

Héctor Delgado Ñ. Santiago, February 28, 2003 Statements of income Division Chuquicamata

Year ended December 31, 2002 2001 ThUS$ ThUS$

OPERATING INCOME

Sales of own products 1,029,229 1,111,518 Sales of copper acquired from third parties 375,142 317,888 Sales of products from other divisions 307,591 354,026 Income from transfers 10,897 34,837

Total income 1,722,859 1,818,269

Cost of sale of own products (768,918) (946,081 ) Cost of sale of copper acquired from third parties (361,677) (310,786 ) Cost of sale of products from other divisions (183,208) (185,722 ) Cost of income from transfers (45,100) (25,081 )

Total costs (1,358,903) (1,467,670 )

Codelco

158 Gross profit 363,956 350,599 Administrative and selling expenses (61,541) (63,941 )

NET OPERATING INCOME 302,415 286,658

NON-OPERATING INCOME AND EXPENSE (204,914) (189,430)

Interest income 3,929 4,217 Equity participation in income of related companies 52 (209 ) Other non-operating income 46,953 56,222 Equity participation in losses of related companies (23,689) (22,084 ) Interest expense (34,909) (47,020 ) Other non-operating expenses (209,202) (193,545 ) Price-level restatement 102 318 Foreign currency translation difference 11,850 12,671

INCOME BEFORE INCOME TAX 97,501 97,228

Income tax (58,228) (72,263 )

INCOME BEFORE MINORITY INTEREST 39,273 24,965

MINORITY INTEREST 723 1

NET INCOME FOR THE YEAR 39,996 24,966 Statements of income Division Radomiro Tomic

Year ended December 31, 2002 2001 ThUS$ ThUS$

OPERATING INCOME

Sales of own products 439,393 411,228 Sales of copper acquired from third parties 79,388 42,190 Sales of products from other divisions 1,626 292 Income from transfers 36 1,029

Total income 520,443 454,739

Cost of sale of own products (255,519) (261,980 ) Cost of sale of copper acquired from third parties (75,193) (41,946 ) Cost of sale of products from other divisions (5,244) 0 Cost of income from transfers 0 (777 )

Total costs (335,956) (304,703 ) 159 Gross profit 184,487 150,036 Annual Report 2002 Administrative and selling expenses (31,517) (16,343 )

NET OPERATING INCOME 152,970 133,693

NON-OPERATING INCOME AND EXPENSE (48,137) (40,425 )

Interest income 879 662 Equity participation in income of related companies (147) (64 ) Other non-operating income 10,894 20,534 Equity participation in losses of related companies 161 (6,686 ) Interest expense (8,936) (8,570 ) Other non-operating expenses (51,459) (45,905 ) Price-level restatement 31 96 Foreign currency translation difference 440 (492 )

INCOME BEFORE INCOME TAX 104,833 93,268

Income tax (60,689) (57,641 )

MINORITY INTEREST 44,144 35,627

INCOME BEFORE MINORITY INTEREST 219 1

NET INCOME FOR THE YEAR 44,363 35,628 Statements of income Division Salvador

Year ended December 31, 2002 2001 ThUS$ ThUS$

OPERATING INCOME

Sales of own products 137,633 139,444 Sales of copper acquired from third parties 52,140 32,588 Sales of products from other divisions 148,854 173,808 Income from transfers 104 96

Total income 338,731 345,936

Cost of sale of own products (170,457) (187,866 ) Cost of sale of copper acquired from third parties (49,435) (32,317 ) Cost of sale of products from other divisions (130,563) (137,292 ) Cost of income from transfers (9,306) (97 )

Gross profit (359,761) (357,572 )

Codelco Resultado bruto (21,030) (11,636 ) 160 Administrative and selling expenses (15,124) (12,257 )

NET OPERATING LOSS (36,154) (23,893 )

NON-OPERATING INCOME AND EXPENSE (38,320) (19,096 )

Interest income 1,091 1,310 Equity participation in income of related companies 102 281 Other non-operating income 15,293 18,973 Equity participation in losses of related companies (7,241) (4,352 ) Interest expense (7,283) (9,715 ) Other non-operating expenses (41,581) (25,759 ) Price-level restatement 20 63 Foreign currency translation difference 1,279 103

INCOME BEFORE INCOME TAX (74,474) (42,989 )

Income tax 40,750 21,004

INCOME BEFORE MINORITY INTEREST (33,724) (21,985 )

MINORITY INTEREST 143 0

NET INCOME FOR THE YEAR (33,581) (21,985 ) Statements of income Division Andina

Year ended December 31, 2002 2001 ThUS$ ThUS$

OPERATING INCOME

Sales of own products 210,382 286,026 Sales of copper acquired from third parties 94,404 62,103 Sales of products from other divisions 21,936 37,406 Income from transfers 83,282 80,049

Total income 410,004 465,584

Cost of sale of own products (191,530) (289,182 ) Cost of sale of copper acquired from third parties (89,710) (61,181 ) Cost of sale of products from other divisions (13,192) 0 Cost of income from transfers (88,432) (77,578 )

Total costs (382,864) (427,941 ) 161 Gross profit 27,140 37,643 Annual Report 2002 Administrative and selling expenses (16,870) (16,733 )

NET OPERATING INCOME 10,270 20,910

NON-OPERATING INCOME AND EXPENSEI (28,811) (50,731 )

Interest income 958 1,193 Equity participation in income of related companies (25) 198 Other non-operating income 11,049 14,335 Equity participation in losses of related companies (3,128) (5,277 ) Interest expense (9,332) (14,029 ) Other non-operating expenses (36,309) (49,229 ) Price-level restatement 24 76 Foreign currency translation difference 7,952 2,002

INCOME BEFORE INCOME TAX (18,541) (29,821 )

Income tax 9,008 9,170

INCOME BEFORE MINORITY INTEREST (9,533) (20,651 )

MINORITY INTEREST 173 0

NET INCOME FOR THE YEAR (9,360) (20,651 ) Statements of income Division El Teniente

Year ended December 31, 2002 2001 ThUS$ ThUS$

OPERATING INCOME

Sales of own products 406,491 469,355 Sales of copper acquired from third parties 127,628 99,133 Sales of products from other divisions 35,169 26,984 Income from transfers 265,096 206,040

Total income 834,384 801,512

Cost of sale of own products (343,782) (390,597 ) Cost of sale of copper acquired from third parties (119,372) (97,650 ) Cost of sale of products from other divisions (8,380) (4,410 ) Cost of income from transfers (216,577) (168,941 )

Total costs (688,111) (661,598 )

Codelco Gross profit 146,273 139,914 162 Administrative and selling expenses (32,621) (28,767 )

NET OPERATING INCOME 113,652 111,147

NON-OPERATING INCOME AND EXPENSE (93,718) (76,829 )

Interest income 2,616 3,024 Equity participation in income of related companies 22 (102 ) Other non-operating income 25,220 24,010 Equity participation in losses of related companies (14,109) (10,684 ) Interest expense (16,445) (20,094 ) Other non-operating expenses (103,089) (87,093 ) Price-level restatement 49 154 Foreign currency translation difference 12,018 13,956

INCOME BEFORE INCOME TAX 19,934 34,318

Income tax (12,964) (26,913 )

INCOME BEFORE MINORITY INTEREST 6,970 7,405

MINORITY INTEREST 350 0

NET INCOME FOR THE YEAR 7,320 7,405 Statements of income Division Talleres

Year ended December 31, 2002 2001 ThUS$ ThUS$

OPERATING INCOME

Sales of products from other divisions 22,873 23,575

Total income 22,873 23,575

Total costs (20,762) (22,967 )

Total costos (20,762) (22,967)

Gross profit 2,111 608 Administrative and selling expenses (2,003) (90 )

NET OPERATING INCOME 108 518

NON-OPERATING INCOME AND EXPENSE (590) 325 163 Interest income 0 440 Annual Report 2002 Other non-operating income 707 781 Interest expense (141) (142 ) Other non-operating expenses (631) (985 ) Foreign currency translation difference (633) (287 )

(LOSS) INCOME BEFORE INCOME TAX (590) 325

Income tax 328 (114 )

(LOSS) INCOME BEFORE MINORITY INTEREST (262) 211

NET (LOSS) INCOME FOR THE YEAR (262) 211 Consolidated Year ended December 31, 2002 statements of income (Amounts in thousands of US$)

STATEMENTS OF INCOME CHUQUICAMATA R, TOMIC SALVADOR ANDINA TENIENTE TALLERES CONSOLIDATED ADJUSTMENTS TOTAL

OPERATING INCOME Sales of own products 1,029,229 439,393 137,633 210,382 406,491 0 2,223,128 0 2,223,128 Sales of copper acquired from third parties 375,142 79,388 52,140 94,404 127,628 0 728,702 0 728,702 Sales of by-products 91,081 1,626 6,590 2,961 35,169 22,873 160,300 0 160,300 Sales of products from other divisions 216,510 0 142,264 18,975 0 0 377,749 0 377,749 Income from transfers 10,897 36 104 83,282 265,096 0 359,415 (359,415) 0

Total income 1,722,859 520,443 338,731 410,004 834,384 22,873 3,849,294 (359,415) 3,489,879

Cost of sale of own products (768,918) (255,519) (170,457) (191,530) (343,782) (20,762) (1,750,968) 0 (1,750,968) Cost of sale of copper acquired from third parties (361,677) (75,193) (49,435) (89,710) (119,372) 0 (695,387) 0 (695,387) Cost of sale of products from other divisions (183,208) (5,244) (130,563) (13,192) (8,380) 0 (340,587) 0 (340,587) Cost of income from transfers (45,100) 0 (9,306) (88,432) (216,577) 0 (359,415) 359,415 0

Total costs (1,358,903) (335,956) (359,761) (382,864) (688,111) (20,762) (3,146,357) 359,415 (2,786,942)

Gross profit (loss) 363,956 184,487 (21,030) 27,140 146,273 2,111 702,937 0 702,937

Add (deduct): Administrative and selling expenses (61,541) (31,517) (15,124) (16,870) (32,621) (2,003) (159,676) 0 (159,676)

164 OPERATING INCOME (LOSS) 302,415 152,970 (36,154) 10,270 113,652 108 543,261 0 543,261

OPERATING INCOME AND EXPENSE Add (deduct): Interest income 3,929 879 1,091 958 2,616 0 9,473 0 9,473 Equity participation in income of related companies 52 (147) 102 (25) 22 0 4 0 4 Other non-operating income 46,953 10,894 15,293 11,049 25,220 707 110,116 0 110,116 Equity participation in losses of related companies (23,689) 161 (7,241) (3,128) (14,109) 0 (48,006) 0 (48,006) Interest expense (34,909) (8,936) (7,283) (9,332) (16,445) (141) (77,046) 0 (77,046) Other non-operating expense (209,202) (51,459) (41,581) (36,309) (103,089) (631) (442,271) 0 (442,271) Price-level restatement 102 31 20 24 49 0 226 0 226 Foreign currency translation differences and adjustments 11,850 440 1,279 7,952 12,018 (633) 32,906 0 32,906

NON-OPERATING LOSS (204,914) (48,137) (38,320) (28,811) (93,718) (698) (414,598) 0 (414,598)

INCOME (LOSS) BEFORE INCOME TAX 97,501 104,833 (74,474) (18,541) 19,934 (590) 128,663 0 128,663

Income tax (58,228) (60,689) 40,750 9,008 (12,964) 328 (81,795) 0 (81,795)

NET INCOME (LOSS) BEFORE MINORITY INTEREST 39,273 44,144 (33,724) (9,533) 6,970 (262) 46,868 0 46,868

MINORITY INTEREST 723 219 143 173 350 0 1,608 0 1,608

NET INCOME (LOSS) FOR THE YEAR 39,996 44,363 (33,581) (9,360) 7,320 (262) 48,476 0 48,476 Consolidated Year ended December 31, 2001 statements of income (Amounts in thousands of US$)

STATEMENTS OF INCOME CHUQUICAMATA R, TOMIC SALVADOR ANDINA TENIENTE TALLERES CONSOLIDATED ADJUSTMENTS TOTAL

OPERATING INCOME Sales of own products 1,111,518 411,228 139,444 286,026 469,355 0 2,417,571 0 2,417,571 Sales of copper acquired from third parties 317,888 42,190 32,588 62,103 99,133 0 553,902 0 553,902 Sales of by-products 166,801 292 32,391 37,406 22,280 23,575 282,745 0 282,745 Sales of products from other divisions 187,225 0 141,417 0 4,704 0 333,346 0 333,346 Income from transfers 34,837 1,029 96 80,049 206,040 0 322,051 (322,051) 0

Total income 1,818,269 454,739 345,936 465,584 801,512 23,575 3,909,615 (322,051) 3,587,564

Cost of sale of own products (946,081) (261,980) (187,866) (289,182) (390,597) (22,967) (2,098,673) 0 (2,098,673) Cost of sale of copper acquired from third parties (310,786) (41,946) (32,317) (61,181) (97,650) 0 (543,880) 0 (543,880) Cost of sale of products from other divisions (185,722) 0 (137,292) 0 (4,410) 0 (327,424) 49,577 (277,847) Cost of income from transfers (25,081) (777) (97) (77,578) (168,941) 0 (272,474) 272,474 0

Total costs (1,467,670) (304,703) (357,572) (427,941) (661,598) (22,967) (3,242,451) 322,051 (2,920,400)

Gross profit (loss) 350,599 150,036 (11,636) 37,643 139,914 608 667,164 0 667,164

Add (deduct): Administrative and selling expenses (63,941) (16,343) (12,257) (16,733) (28,767) (90) (138,131) 0 (138,131) 165

OPERATING INCOME (LOSS) 286,658 133,693 (23,893) 20,910 111,147 518 529,033 0 529,033

OPERATING INCOME AND EXPENSE Add (deduct): Interest income 4,217 662 1,310 1,193 3,024 440 10,846 0 10,846 Equity participation in income of related companies (209) (64) 281 198 (102) 0 104 0 104 Other non-operating income 56,222 20,534 18,973 14,335 24,010 781 134,855 0 134,855 Equity participation in losses of related companies (22,084) (6,686) (4,352) (5,277) (10,684) 0 (49,083) 0 (49,083) Interest expense (47,020) (8,570) (9,715) (14,029) (20,094) (142) (99,570) 0 (99,570) Other non-operating expense (193,545) (45,905) (25,759) (49,229) (87,093) (985) (402,516) 0 (402,516) Price-level restatement 318 96 63 76 154 0 707 0 707 Foreign currency translation differences and adjustments 12,671 (492) 103 2,002 13,956 (287) 27,953 0 27,953

NON-OPERATING LOSS (189,430) (40,425) (19,096) (50,731) (76,829) (193) (376,704) 0 (376,704)

INCOME (LOSS) BEFORE INCOME TAX 97,228 93,268 (42,989) (29,821) 34,318 325 152,329 0 152,329

Income tax (72,263) (57,641) 21,004 9,170 (26,913) (114) (126,757) 0 (126,757)

NET INCOME (LOSS) BEFORE MINORITY INTEREST 24,965 35,627 (21,985) (20,651) 7,405 211 25,572 0 25,572

MINORITY INTEREST 1 1 0 0 0 0 2 0 2

NET INCOME (LOSS) FOR THE YEAR 24,966 35,628 (21,985) (20,651) 7,405 211 25,574 0 25,574 Basis of Preparation of the Statements of Income by Divisions

The statements of income by divisions are prepared in compliance with the Company’s statutory obligations and on the basis of accounting principles generally accepted in Chile and the following internal accounting policies:

Note 1 Interdivisional Transfers

The Company performed and recorded interdivisional transfers of products and services at prices which are similar to market values. Consequently, these statements of income by divisions include the following:

-Sales revenues with separate line items related to sales to third parties of products received from other divisions and to revenues generated by transfers to other divisions.

- Costs of sales with separate line items related to cost of products received from other divisions and sold to third parties, and the costs corresponding to revenues from transfers to other divisions.

Codelco 166 Note 2 Allocation of Corporate Income and Expenses

Income and expenses incurred by the Head Office and by the Company's subsidiaries, are allocated to operating divisions on the basis of policies established for each year as described in the Statement of Allocation of Income and Expenses of the Head Office and Subsidiaries. Statement of Allocation of Controlled Income and Expenses of the Head Office and Report of Independent Accountants Subsidiaries Santiago, Chile, December 31, 2002 and 2001

To the Chairman and Directors of Corporación Nacional del Cobre de Chile

We have reviewed the allocation of controlled income and expenses of the Head Office and Subsidiaries to the operating divisions of Corporación Nacional de Cobre de Chile for the year ended December 31, 2002. Our work consisted principally of a review of the criteria applied for determination of the allocation of these income and expenses in compliance with internal regulations established by Corporación Nacional del Cobre de Chile.

Amounts included in the Statement of Allocation of Controlled Income and Expenses of the Head Office and Subsidiaries form a part of the consolidated financial statements of Corporación Nacional del Cobre de Chile for the year ended December 31, 2002, on which we issued an unqualified opinion on the same date.

In our opinion, the controlled income and expenses of the Head Office and Subsidiaries for the year ended December 167 31, 2002, have been reasonably allocated to each operating division of Corporación Nacional del Cobre de Chile, in Annual Report 2002 conformity with the Company’s internal allocation regulations.

Héctor Delgado Ñ. Santiago, February 28, 2003 Statement of allocation of controlled income and expenses of the head office and subsidiaries to the company's operating divisions For the period between january 1 and December 31, 2002 (expressed in thousands of United States dollars)

Administrative and selling expenses, Total Chuquicamata R,Tomic Salvador Andina El Teniente Talleres interest expense and other expenses

Sales, Head Office and subsidiaries 594,747 267,603 81,014 52,728 63,945 129,457 0 Cost of sales, Head Office and subsidiaries (590,510) (265,698) (80,437) (52,352) (63,489) (128,534) 0 Administrative and selling expenses (90,319) (41,020) (11,473) (8,351) (10,353) (19,032) (90) Interest income 6,491 2,947 757 614 783 1,390 0 Equity participation in income of related companies (199) (52) (147) 36 (58) 22 0 Other non-operating income 56,245 24,983 7,131 5,703 5,941 12,487 0 Equity participation in losses of related companies (48,006) (23,689) 161 (7,241) (3,128) (14,109) 0 Interest expense (76,986) (34,895) (8,936) (7,278) (9,293) (16,443) (141) Other non-operating expenses (306,211) (144,051) (46,477) (23,572) (25,870) (66,241) 0

Codelco Price-level restatement 226 102 31 20 24 49 0 168 Foreign currency translation differences and adjustments 30,216 10,783 453 1,317 7,821 10,474 (632) Income tax (81,795) (58,228) (60,689) 40,750 9,008 (12,964) 328 Minority interest 1,608 723 219 143 173 350 0

Total (504,493) (260,492) (118,393) 2,517 (24,496) (103,094) (535) Criteria Applied to the Allocation of Controlled Income and Expenses of the Head Office and Subsidiaries

Controlled income and expenses of the Head Office and Subsidiaries are allocated to each operating division in accordance with criteria set forth for each of the income statement accounts, as follows:

1. Sales and Costs of Commercial Activities of the Head Office and Subsidiaries - Sales and costs of commercial activities are allocated considering the values of products and by-products billed by each division.

2. General Administrative Expenses 2.1 Administrative expenses - Costs centers specifically identifiable to each division are allocated directly to that division.

- Sales Cost Centers are allocated proportionally on the basis of the volume of invoices billed and accounted for by each division upon dispatch of products and by-products.

- Supply Cost Centers are allocated proportionally on the basis of the stock balance of supplies in warehouse in each operating division.

- The other Cost Centers are allocated proportionally on the basis of the operational outflows of each division. 169 Annual Report 2002

2.2 Selling Expenses - Costs specifically identifiable to each division are allocated directly.

- Other costs are allocated proportionally on the basis of invoices billed and accounted for by each division upon dispatch of products and /or by-products.

3. Interest Income - Income associated with and identified as pertaining to each particular division is allocated directly.

- The remaining balance is allocated on the basis of the operational outflows of each division.

4. Equity Participation in Income of Related Companies - Income associated with and identified as pertaining to each particular division is allocated directly.

- The remaining balance is allocated proportionally on the basis of own products and by-products billed and by each division.

5. Other Non-operating Income - Income associated with and identified as pertaining to each particular division is allocated directly.

- The remaining balance is allocated on the basis of the balance of the “other non-operating income” account for each respective division. 6. Equity Participation in Losses of Related Companies

- Losses associated with and identified as pertaining to each particular division are allocated directly.

- The remaining balance is allocated proportionally on the basis of own products and by-products billed and by each division.

7. Interest Expense - Expenses associated with and identified as pertaining to each particular division are allocated directly.

- The remaining balance is allocated on the basis of the operational outflows of each division.

8. Other Non-operating Expenses 8.1 Other expenses - Expenses associated with and identified as pertaining to each particular division are allocated directly.

- The remaining balance is allocated on the basis of the balance of the "Other non-operating expenses" account for each

Codelco division. 170

8.2 Contribution Law N° 13196 Contribution Law N° 13196 is allocated on the basis of the invoiced and accounted for balance of copper and by-product exports of each division. Adjustments are made for contributions affecting interdivisional transfers which are assigned to the division from which the products originated.

9. Price-level Restatement The balance originated from the constant currency restatement of the amounts of the Head Office and its subsidiaries is allocated considering the balance of own products invoiced by each division.

10. Foreign Currency Translation Differences and Adjustments - Foreign currency translation variations identifiable with each division are allocated directly.

- Differences arising from the conversion of US dollars into Chilean pesos are allocated on the basis of transfers of funds and payments performed by the Head Office on behalf of each division.

- The remaining balance is allocated on the basis of the operational outflows of each division.

11. Income Tax - Income tax is allocated to each division on the basis of the actual calculation of income, which is determined considering the income (loss) before tax of each division. 171 ) ) ) ) 0 0 0 0 0 0 0 0 0 3 (7 (0 (4 45 (45) (236) Minera (8,375 (8,139) (8,375) Los Andes Compañía Contractual ) ) ) ) ) 4 0 0 0 0 0 0 0 0 (13 489 1,750 2,243 4,116 2,243 S.A. (1,873 (3,111 (3,124 (3,124 (1) (2) del Norte Geotérmica ) ) ) ) ) 0 0 7 0 0 0 0 32 (34 S.A. (121 (121 (121 (117 1,335 1,367 1,360 1,367 1,481 1,330 Biosigma ) ) ) ) 0 (1) 85 71 19 (14 (98 527 144 471 234 290 (149 (172 Ltda. 3,082 3,753 1,195 2,087 3,753 Isapre Isapre Río Blanco ) ) ) 0 0 0 2 75 39 (23 (38 470 104 196 770 467 303 770 286 158 135 (128 Ltda. Isapre Isapre San Lorenzo ) ) ) 0 0 (2 30 28 700 815 109 256 (670 (668 Ltda. 1,608 2,499 1,499 5,606 2,905 1,054 1,647 5,606 Isapre Isapre Chuquicamata As of December 2002 8 0 0 8 1 0 0 7 8 0 0 0 0 0 0 0 0 0 0 (1) (2) S.A.C. Río Grande Santiago de ) ) ) ) ) ) ) 2 0 7 0 0 2 (6 (6 15 33 (73 (40 (40 (46 (56 666 668 646 668 Asociación de Pensiones Garantizadora ) ) ) ) ) 0 0 27 15 91 44 (20 (37 649 135 115 151 (352 (422 (660 S.A. 3,000 3,042 2,393 3,042 Instituto de Min. y Metal. Innovación en ) ) ) ) ) ) 0 0 0 0 0 0 0 0 9 (1 12 12 12 (10 453 (441 (823 (823 (823 (2) Ltda. Elaboradora de Cobre Chilena de Cobre ) ) ) ) ) ) ) 0 0 0 0 0 0 0 0 (5 (0 31 31 31 31 (23 (23 (215 (220 (220 S.A. Ejecutora Hospital del Cobre Calama Cobre ) ) ) ) ) ) 0 (6 (4 48 95 24 (30 687 168 (717 (653 4,971 61,400 66,419 46,819 19,505 66,419 14,273 (13,448 Portuario Complejo Mejillones S.A. ) ) ) ) ) ) ) ) ) ) 18 20 862 (819 (617 (735 (459 (312 CMS Chile 6,677 4,345 7,919 (7,332 (1,858 (1,167 (3,025 (3,642 S.A. and 11,040 11,272 11,040 subsidiary ) ) ) ) 0 0 7 5 0 0 0 0 0 0 0 88 (15 S.C. 100 100 100 (1) (2) (793 (808 (808 Minera Picacho ) ) ) ) ) ) ) ) ) 0 0 147 210 (172 (355 2,327 Limited (2,962 (3,134 (3,134 (2,265 (1,709 Codelco 10,328 12,802 24,156 12,802 15,552 (11,564 (14,641 International ) ) 7 0 0 6 0 0 (5 (2 10 881 898 119 779 898 151 157 152 104 102 Group Codelco USA Inc. (expressed thousands of US$) in ) ) Summarized financial statements of subsidiaries 8 0 0 0 0 0 0 248 951 775 (176 (1) 2,755 8,132 2,013 (1,062 GMBH 25,806 28,569 20,189 28,569 Codelco Küpferhandel ) ) 0 0 0 0 0 0 0 0 40 (54 183 129 (1) (901 Ltd. Chile 8,322 2,178 1,105 Copper 10,460 10,500 10,500

Assets Current Assets Total Total Fixed Assets Total Total Other Assets Total Total Assets Total Liabilities Current Liabilities Total Total Long Term Liabilities Long Term Total Minority Interest Total Equity Total Total Liability and Equity Total Exploitation Result STATEMENT OF RESULTS STATEMENT Result Other than Exploitation Result before Income Tax Income Tax Profit (Loss) of Exercise Net flow originated by operation activities Net flow originated by financing activities Net flow originated by investment activities Effect of inflation on cash and equivalent cash Net variation of cash and equivalent cash (1) It does not have statement of cash flows (2) Unaudited financial statement Summarized financial statements of subsidiaries

(expressed in thousands of US$) As of December 2001

Chile Codelco Codelco Codelco S.C. CMS Complejo Ejecutora Elaboradora Instituto de Asociación Santiago de Isapre Isapre Isapre Compañía Inversiones Inversiones Copper Küpferhandel Group International Minera Chile Portuario Hospital del de Cobre Chilena Innovación en Garantizadora Río Grande Chuquicamata San Lorenzo Río Blanco Contractual Enercobre Cobre Ltd. GMBH USA Inc. Limited Picacho S.A. and Mejillones S.A. Cobre Calama Ltda. Min. y Metal. de Pensiones S.A.C. Ltda. Ltda. Ltda. Minera S.A. Dos S.A. (1) (1) (1) (2) subsidiary S.A. (1) (2) S.A. (1) (2) Los Andes

Assets Total Current Assets 18,337 24,117 734 1,996 106 12,778 697 291 12 3,159 771 9 1,009 1,976 525 213 207 209 Total Fixed Assets 67 8 7 0 851 4,948 3,870 0 0 56 0 0 3,027 26 3,240 8,631 0 2 Total Other Assets 0 2,323 0 735 14 1,018 2,023 0 561 34 0 0 1,164 273 210 449 0 0

Total Assets 18,404 26,448 741 2,731 971 18,744 6,590 291 573 3,249 771 9 5,200 2,275 3,975 9,293 207 211

Liabilities Total Current Liabilities 16,575 8,433 115 2,731 9 16,556 27 24 0 445 6 0 2,423 2,139 1,383 0 0 50 Total Long Term Liabilities 0 1,640 0 0 0 5,220 988 0 0 0 14 0 1,079 4 2,167 449 0 0 Minority Interest 397 0 0 0 0 1,016 0 0 0 0 0 0 0 0 0 0 0 0 Total Equity 1,432 16,375 626 0 962 (4,048) 5,575 267 573 2,804 751 9 1,698 132 425 8,844 207 161

Total Liability and Equity 18,404 26,448 741 2,731 971 18,744 6,590 291 573 3,249 771 9 5,200 2,275 3,975 9,293 207 211

STATEMENT OF RESULTS 172 Exploitation Result (1,076) 1,740 104 0 0 (428) (697) (32) (69) 244 (28 ) 0 (104) (153) (67) (5) (42) (149) Result Other than Exploitation 1,095 2,369 24 0 12 (1,713) 72 73 (290) 107 0 0 114 475 312 (1,148) 170 224 Result before Income Tax 19 4,109 128 0 12 (2,141) (625) 41 (359) 351 (28 ) 0 10 322 245 (1,153) 128 75 Income Tax (19) (1,810) (2) 0 0 (1) 0 0 0 (47) 0 0 (9) 0 3 0 0 (15) Profit (Loss) of Exercise 0 2,299 126 0 12 (2,142) (625) 41 (359) 304 (28 ) 0 1 322 248 (1,153) 128 60

Net flow originated by operation activities 0 0 142 0 0 (430) (643) 14 0 236 (15 ) 0 698 415 (136) 0 242 95

Net flow originated by financing activities 0 0 0 0 0 567 4,795 0 0 0 0 0 0 (417) 294 (193) (6,896) (8,890)

Net flow originated by investment activities 0 0 (6) 0 (10) (1,409) (4,448) 0 0 (30) 234 0 (2,511) (40) (164) 0 6,532 8,714

Effect of inflation on cash and equivalent cash 0 0 0 0 9 39 (9) (5) 0 (25) (7 ) 0 49 (3) 0 0 (10) (104)

Net variation of cash and equivalent cash 0 0 136 0 (1) (1,233) (305) 9 0 181 212 0 (1,764) (45) (6) (193) (132) (185)

(1) It does not have statement of cash flows (2) Unaudited financial statement Main accounting criteria applied

Note 01 Summary of the main accounting criteria applied

a) Period The present financial statements correspond to the exercises between January 1st and December 31st 2002 and 2001.

b) Bases for the preparation of the financial statements These financial statements have been prepared according to the accounting principles that are generally accepted in Chile and issued by the Colegio de Contadores de Chile A.G. and standards and guidelines issued by the Superintendencia de Valores y Seguros. In case of discrepancy, the latter prevail.

c) Bases for the preparation of the consolidated financial statements According to the regulations of the Superintendencia de Valores y Seguros and the Technical Bulletins issued by the Colegio de Contadores de Chile A.G., the Societies have prepared these consolidated financial statements which include assets, liabilities, results and cash flows of the subsidiaries.

All the significative amounts and effects of transactions between the consolidated companies have been eliminated and

the participation of the minority investors has been recognized, as minority interest. The consolidated financial statements 173 Annual Report 2002 consider the elimination of the balances, transactions and profits that were not carried out between the consolidated companies, including the foreign and national subsidiaries.

d) Currency These financial statements are expressed in the currency of the country of origin of the subsidiary.

e) Currency correction The financial statements of the national subsidiaries which maintain their accounting in Chilean pesos have incorporated the effects of the variation in purchasing power of the currency occurred during the corresponding exercises, as established by the currency correction standards. The updatings have been established on the basis of the official index of variation of price to the consumer of the Instituto Nacional de Estadísticas, which originated an updating of 3% as of December 31st 2002 (3.1% in 2001).

f) Conversion bases As of December 31st of 2002 and 2001, the assets and liabilities in foreign currency and unidades de fomento, have been converted to current currency according to the parities existing at the end of the exercise, as shown in the following table:

2002 2001 US$ US$

Sterling pound 1,60436 1,45370 Euro 1,04723 - German mark - 0,45163 Mexican peso 0,09626 0,10931 Unidad de Fomento 23,27416 24,71924 g) Term deposits The term deposits are recorded at their investment value plus their corresponding accrued interests at the end of each exercise.

h) Negotiable values In this item, mutual funds installments and other easily liquidated instruments are presented, recorded at their cost or market value (whichever is lowest).

i) Inventories Inventories are valued at cost, which is not higher than its net value of realization.

j) Estimation uncollectable debtors The Societies, when appropiate, record a provision of uncollectable debts, based on the experience and analysis of the management, in the debtor portfolio and in the age of the parties.

k) Fixed asset The fixed asset is valued at the historical cost, net of accumulated depreciation. Codelco 174 The works under construction include the values invested in fixed assets under construction.

l) Depreciations The depreciation of the fixed asset is determined on its corresponding book value, according to the lineal method and on the basis of the years of estimated useful life of the goods.

m) Assets in leasing The goods of fixed assets recorded by the subsidiaries through contracts in the modality of financial leasing are presented in the item Other Fixed Assets. These goods have been valued at their current value applying the implicit interest rate in the contracts and they are depreciated on the basis of the lineal method, according to the years of estimated useful life of the goods. These goods are not lawfully property of the Societies as long as these do not exercise the corresponding purchase option.

n) Investment in associated companies The investment in associated companies, both in Chile and abroad, that have a permanent character, are valued according to the method of proportional patrimonial value, following standards established by the Technical Bulletins of the Colegio de Contadores de Chile A.G., except for the investments maintained by the subsidiaries in England and Germany.

The investment in other societies is recorded at their purchasing value, which is not higher than the market value.

o) Intangibles These are recorded at the value of the effective disbursements carried out and their amortization is performed according to Technical Bulleting Nº 55 of the Colegio de Contadores de Chile A.G. p) Income and defered taxes The income taxes are provisioned according to the legal requirements in force.

The societies acknowledge in the financial statements the effect of the defered taxes allocated to the temporary differences, which have a different treatment for taxation and accounting according to the Technical Bulletins of the Colegio de Contadores de Chile A.G. and following the guidelines of the Superintendencia de Valores y Seguros de Chile.

q) Computer software The computer systems developed through the use of own human and material resources are charged to the result of the exercise in which these were required.

r) Research and development expenses The expenses in research and development are charged to the result of the exercise in which they were required.

s) Cash flow statements The cash balances, bank balances, financial instruments and term deposits, classified as short term negotiable values

with expiration within 90 days without restrictions have been considered as cash and equivalent cash, as established by 175 Annual Report 2002 the Technical Bulletins issued by the Colegio de Contadores de Chile A.G. and regulations of the Superintendencia de Valores y Seguros. The subsidiaries of England and Germany do not present cash flow statements, since they are not required in those countries.

The societies have considered as cash movement of operational, investment or financing character, according to the Technical Bulletins of the Colegio de Contadores de Chile A.G. and regulations of the Superintendencia de Valores y Seguros.

Note 02 Accounting Changes

As of December 31st 2002 there are no signficative accounting changes in the application of the accounting principles compared to the previous exercise. Remunerations Board of Directors and administration

YEAR 2001 US$

José De Gregorio Rebeco 14,509 Nicolás Eyzaguirre Guzmán 32,271 Patricio Meller Bock 32,271 Marco Colodro Hadjes 19,785 Miguel Vergara Villalobos 14,509 Luis Castelli Sandoval 32,271 Raimundo Espinoza Concha 32,271 Jorge Rodríguez Grossi 17,607 Alejandro Rosa Leighton 15,047 Jorge Navarrete Martínez 9,911

Total 220,452

Codelco YEAR 2002 US$ 176

Alfonso Dulanto Rencoret 32,241 Nicolás Eyzaguirre Guzmán 32,241 Patricio Meller Bock 32,241 Ricardo Ortega Perrier 26,733 René Valdenegro Oyaneder 26,733 Bismark Robles Guzmán 26,733 Luis Castelli Sandoval 8,313 Raimundo Espinoza Concha 8,313 Alejandro Rosa Leighton 8,313 Jorge Navarrete Martínez 32,241

Total 234,102

The remunerations of the senior executives of the Corporation in 2002 amount to US$ 3,002,741 Offices, subsidiaries and sales Headquarter Subsidiaries representatives

Huérfanos 1270 ENGLAND Postal Code 150-D Chile Copper Ltd. Santiago, Chile 27 Albemarle Street Cable Address: "Codelco-Chile" London W1S 4HZ England Web Site: www.codelcochile.com Phone: 44-207-907 9600 Phone: 56 (2) 690 3000 Fax: 44-207-907 9610 Fax: 56 (2) 672 1473/690 3059 MR. GONZALO CUADRA Telex: 240672 CUPRU CL VICE - PRESIDENT UK SUBSIDIARIES E-mail: [email protected] E-mail: [email protected]

CHINA Codelco-Asia No.5 Shenton Way 14-03 U.I.C. Building Singapore 0106 Singapore Phone: (65) 225 8817 Fax: (65) 225 1853/2258079 Telex: RS 26170 MR. LUIS ERNESTO MIQUELES MANAGER E-mail: [email protected] 177 GERMANY Annual Report 2002 Codelco-Küpferhandel GmbH Louise Dumont Strasse 25 40211 Düsseldorf 1 Germany Phone: 49 (211) 173680 Fax: 49 (211) 1736922 MR. HERIBERT HEITLING MANAGER E-mail: [email protected]

USA Corporación del Cobre USA Inc. 177 Broad Street, 11th Floor Stamford, CT 06901 Phone: 1-203-425 4321 Fax: 1-203-425 4322 MR. HUGO JORDAN MANAGER E-mail: [email protected] Copper Sales Representatives

ARGENTINA JAPAN Coppermol S.A. Shimex Ltd. Ricardo Rojas 401, Piso 4, Buenos Aires 1001 NBC Nishi-Shinbashi Bldg. Phone: 54-11-4312 7086/ 3127089 Fax: 54-11-43114007 5-10, Nishi Shinbashi 2-chome, Minato-ku, Tokyo 105-0003 Telex: 23644 COMOL AR Phone: 81-3-350 1 777 8 Fax: 81-3-350 1 7760 MR. EDUARDO ROMERO MR. TADASHI SHICHIRI MANAGER MANAGER E-mail: [email protected] E-mail: [email protected] AUSTRALIA KOREA Unimet PTY Ltd. K.S. Metals Corp. 13 Spring Road Malvern Vic 3144, Melbourne Dabo Bldg 5th Floor, 140 Mapo-Dong, Phone/fax: 61-39-824 6575 Mapo-Ku, Seoul 121-714 ESTEBAN CHEMKE Phone: 82-2-719 4255 (Rep.) Fax: 82-2-719 4340 MANAGER MR. YOUNG CHONG KIM E-mail: [email protected] MANAGER E-mail: [email protected] BRAZIL Chilebras Metais Ltda. MALASIA, INDONESIA, THAILAND, MYANMAR, Avda. Brigadeiro Faria Lima, 2081 SHANGHAI, VIETNAM AND HONG KONG 8° CJ. 82-A 01452-908 - Sâo Paulo Codelco- (Shangai) Limited Phone: 55-11-38174229 / 3817 5522 / 55-11-3031 1122 Unit 36-01, Bund Centre, 222 Yan An Road East. Fax: 55-11-3032 2096 Shanghai 200002 PRC MR. JOSE DAYLLER Phone: 86-21-633 502 86 / 86-21-633 502 87 MANAGER Fax: 86-21-633 502 89 E-mail: [email protected] MR. LUIS ERNESTO MIQUELES MANAGER ENGLAND, SPAIN, FINLAND, NORWAY, AND SWEDEN E-mail: [email protected] Codelco

178 Chile Copper Ltd. 27 Albemarle Street, London 1X 3FA MEXICO Phone: 44-207-907 9600 Fax: 44-207-907 9610 PruTrade S.A. de C.V. MR. GONZALO CUADRA Rinconada de Río Grande # 73, Colonia Vista Hermosa CP VICE - PRESIDENT 62290, Cuernavaca, Morelos E-mail: [email protected] Phone: 52-777-315-5500 / 315-5919 / 316-3213 Fax: 52-7-315-3979 FRANCE AND BELGIUM MR. JAIME PRUDENCIO Francomet S.A. MANAGER 174 Boulevard Haussmann, 75008 Paris, France E-mail: [email protected] Phone: 33-1-4561 4781 Fax: 33-1-4289 0412 Telex: 648127 FRANMET REPUBLIC OF CHINA MR. JEAN PIERRE TOFFIER Raw Materials Ltd. MANAGER 141 Tun Hua North Road, 3rd Floor, Taipei, Taiwan (R.O.C.) E-mail: [email protected] Phone: 886-2-2712 8963 Fax: 886-2-2713 3016 Telex: 19955 RML TPE GERMANY, AUSTRIA, HOLAND AND DENMARK MR. FRANK H. L. SHEN CK Metall Agentur GMBH MANAGER Louise Dumont Strasse 25, Postfach 240226 E-mail: [email protected] 40091 Düsseldorf 1, Germany Phone: 49-211-17369-0 Fax: 49-211-17368-18 SAUDI ARABIA MR. HERIBERT HEITLING A.IBN Abdul Muthalib St. (140) Habboubi Bldg. (1st Floor) MANAGER Sharfeya Dist. Jeddah 21484 E-mail: [email protected] Phone: 966-2-65183 48 / 651 3758 Fax: 966-2-65139 47 MR. BASSAM YAMOUT INDIA MANAGER Trikona Services Flat Nº 2, 11, Aurangzeb Road, New Delhi - 110 011 USA AND CANADA Phone: 91-11-2301 0974 Fax: 91-11- 2379 4933 Corporación del Cobre USA Inc. Telex: 31-65640 RESN IN 177 Broad Street, 11th Flr. Stamford,CT 06901 MRS. RENU DAULET SINGH Phone: 1-203-425 4321 Fax: 1-203-425 4322 MANAGER MR. HUGO JORDAN E-mail: [email protected] MANAGER E-mail: [email protected] ITALY, GREECE AND SWITZERLAND Societá Importazione Metalli S.R.L. Via Paolo Sarpi 59, 20154 Milano (MI) Italy Phone: 39-02-331 1461 Fax: 39-02-331 06968 Telex: 311480 SCHWEN 1 MR. CARLO SCHWENDIMANN MANAGER E-mail: [email protected] Molybdenum Sales Representatives

ARGENTINA ITALY AND SWITZERLAND Coppermol S.A. Societá Importazione Metalli S.R.L. Ricardo Rojas 401, Piso 4, Buenos Aires 1001 Via Paolo Sarpi 59, 20154 Milano (MI) Italy Phone: 54-11-4312 7086/ 3127089 Phone: 39-02-331 1461 Fax: 54-11-43114007 Fax: 39-02-331 06968 Telex: 23644 COMOL AR Telex: 311480 SCHWEN 1 MR. EDUARDO ROMERO MR. CARLO SCHWENDIMANN MANAGER MANAGER E-mail: [email protected] E-mail: [email protected]

AUSTRALIA ENGLAND, FINLAND, SWEDEN AND Unimet PTY Ltd. SPAIN 13 Spring Road Malvern Vic 3144, Melbourne Chile Copper Ltd. Phone: 61-3-9 824 6575 27 Albemarle Street, Fax: 61-3-9 824 7071 London W1S 4HZ ESTEBAN CHEMKE Phone: 44-207-907 9600 MANAGER Fax: 44-207-907 9610 E-mail: [email protected] MR. GONZALO CUADRA VICE-PRESIDENT GERMANY, AUSTRIA, HOLAND AND E-mail: [email protected] DENMARK CK Metall Agentur GMBH JAPAN Louise Dumont Strasse 25, Postfach 240226 Shimex Ltd. 40091 Düsseldorf 1, Germany Terao Bldg.8-4 Phone: 49-211-17369-0 Nishi Shinbashi 2-chome 179 Fax: 49-211-17368-18 Minato-ku, Tokyo 105-0003 Annual Report 2002 MR. HERIBERT HEITLING Phone: 81-3-350 1 777 8 MANAGER Fax: 81-3-350 1 7760 E-mail: [email protected] MR. TADASHI SHICHIRI MANAGER FRANCE AND BELGIUM E-mail:[email protected] Francomet S.A. 174 Boulevard Haussmann SOUTH AFRICA 75008 Paris, France International Metal Marketing (Pty) Ltd. Phone: 33-1-4561 4781 P.O. Box 78465 Fax: 33-1-4289 0412 Sandton 2146 Telex: 648127 FRANMET South Africa MR. JEAN PIERRE TOFFIER Tel: 2711-285 00 17 MANAGER Fax: 2711-8868381 E-mail: [email protected] MR. KEES HOEBEN MANAGER BRAZIL E-mail: [email protected] Chilebras Metais Ltda. Avda. Brigadeiro Faria Lima, 2081 8° CJ. 82-A 01452-908 - Sâo Paulo Phone: 55-11-38174229 / 3817 5522 55-11-3031 1122 Fax.: 55-11-3032 2096 MR. JOSE DAYLLER MANAGER E-mail: [email protected] Anodic Slimes Sales Representative

MEXICO PruTrade S.A. de C.V. Rinconada de Río Grande # 73 Colonia Vista Hermosa CP 62290 Cuernavaca, Morelos Phone: 52-777-315-5500 / 315-5919 / 316-3213 Fax: 52-7-315-3979 MR. JAIME PRUDENCIO MANAGER E-mail: [email protected]

Codelco 180

Design and production Conexión XXI Comunicaciones

Photographs Rodrigo Rojas Archivo Codelco

Printing Morgan Impresores

Translated to English Juan C arlos Torres