"Antofagasta has set a goal to reduce its forecast greenhouse gas emissions by 300,000 mt by 2022, supported by a series of initiatives including the transition of all our mining operations’ energy supply to renewables by 2022."

Iván Arriagada

CEO, ANTOFAGASTA PLC

February 17, 2021

How did Antofagasta overcome the challenges posed by the health crisis? To what extent was the Chilean mining industry impacted?

The safety and health of our workers and local communities has always been our first priority and never has this been more important than in the past year. We rapidly shifted our office-based workforce to working from home and introduced a range of new protocols to protect people. We have also been operating with approximately two-thirds of personnel at our key operations, with the rest either working from home or in quarantine.

Throughout, we have been working in coordination with government authorities to ensure a consistent approach and also established a US$6 million fund to provide equipment, supplies and financial support to the communities near our operations.

Even though mine development and maintenance activities were initially restricted, operations have adjusted to the new working conditions and resumed. These measures enabled us to continue operating during the past year, allowing us to achieve our full year production guidance for 2020 and lower cash costs than in 2019.

Could you provide an overview of 2020 production and costs, and indicate your guidance for 2021?

Full year copper production was 733,900 tonnes (mt) and cash costs were US$1.14/lb. This reflects our resilience and flexibility over the past year.

We expect another solid performance in 2021, with copper production of 730-760,000 mt at a net cash cost of US$1.25/lb as ore grades increase at Centinela and operating efficiency at our mines remains high. This guidance assumes our COVID-19 measures will remain in place for all of 2021.

What is the status of the Los Pelambres expansion? How is Chile increasingly using seawater for mining operations?

The construction of the Los Pelambres expansion project restarted in August alongside a detailed review of the project schedule and costs, including any COVID-19 restrictions. Changes to the marine works to enable the future expansion of the desalination plant have recently been completed. We now expect the project to complete in early H2 2022.

Some mines in Chile are located in arid areas, where continental water availability is decreasing. Care for this precious resource is a crucial part of our approach and we are currently making the investments to use about 90% sea or recycled water from 2025 onwards. At the moment, we use raw seawater at Centinela and Antucoya, and we are also building a desalination plant at Los Pelambres to release continental water for agricultural and other purposes in the Choapa valley.

The usage of seawater is becoming increasingly common in Chile and no new mining projects of any size will be permitted to operate using continental water in the future.

Antofagasta has made a decided move towards renewables: What is timeline for transition and its impact on the group’s CO2 emissions?

Antofagasta has set a goal to reduce its forecast greenhouse gas emissions by 300,000 mt by 2022, supported by a series of initiatives including the transition of all our mining operations’ energy supply to renewables by 2022.

While we consume a lot of energy as a sector, we are convinced that copper mining is a key component in the move to a more sustainable world given its energy efficiency benefits, with multiple applications in battery technology, zero emission transportation and renewable power generation technologies.

Analysts foresee a lag in mining investment in Chile as it rewrites a constitution that underpinned three decades of mining growth. Do you see this impacting investment?

We are now in the process of electing a convention of citizens to oversee the writing of a new draft by mid-2022. It is still unclear, but I believe it is an opportunity for us to address the social issues in our country and positively affect people’s wellbeing.

For the mining industry, I don’t expect Chile to move away from the robust and predictable set of rules we have and which have allowed mining investment to prosper and deliver growth in the sector over the last 40 years. People recognize that Chile’s prosperity depends on having a strong mining industry and investment and growth are required to fund the social reforms currently under discussion.

What is your view of copper fundamentals and the key drivers?

The metal’s attraction lies in its unique combination of properties which make it central to mankind’s development. Following 2020 and the impact of the pandemic, we now have a tight market and expectations are that there will be major stimulus to the global economy. We believe that copper demand growth will continue as the world seeks to find cleaner solutions for modern life.

It also will play a key part in sustainable urban development and a post-pandemic world, given its antimicrobial qualities.

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